Filtered by Topic: Monetary Policy Use setting Monetary Policy
RBA will keep hiking to 4.85% The minutes of the RBA’s June meeting largely reaffirmed the Bank’s pivot to a more hawkish stance. To be sure, the Board did discuss the option of leaving rates unchanged, given the ongoing fall in households’ real …
20th June 2023
Note: We’ll be discussing the UK’s economic, housing market and policy outlook in light of the BoE’s June rate decision in an online briefing on 22nd June at 10:00 EDT/15:00 BST . Register now . Overview – As the UK’s recent problem of higher inflation …
19th June 2023
This week’s plunge in the Nigerian naira marked the latest positive step by President Bola Tinubu as he seeks to overhaul the economy, but there are still plenty of reasons to be cautious that this policy shift marks a clean break from the Buhari-era. A …
16th June 2023
Brazil: shifting towards rate cuts? Expectations for interest rate cuts in Brazil have grown in light of recent developments, but, for now, we’re sticking with our view that Copom will hold off on lowering interest rates until November. The arguments in …
Note: We’ll be discussing the UK’s economic, housing market and policy outlook in light of the BoE’s June rate decision in an online briefing on 22nd June at 10:00 EDT/15:00 BST . Register now . The title of last week’s UK Economics Weekly was “Why …
More ground to cover The message from the ECB yesterday was decidedly hawkish. The Bank raised rates and more or less promised another hike in July, while the substantial upward revision to its inflation forecasts implied that further tightening could …
Monetary easing alone won’t suffice Data published this week made it clear that the reopening recovery has stalled. Momentum weakened almost across the board in May, and the labour market began to soften again. Broad credit growth also slowed sharply . …
Note: We’re talking inflation and the BOJ, slowing Indian growth, and regional monetary easing in our Asia Drop-In on Thursday, 22nd June. Register now . Latest inflation data support our rates cuts view The overarching message from our Q3 India Economic …
Note: We’re talking inflation and the BOJ, slowing Indian growth, and regional monetary easing in our Asia Drop-In on Thursday, 22 nd June. Register now . The Bank of Japan left its monetary policy settings and assessment of the economy unchanged today. …
More inaction to come As was widely expected, the Bank of Japan didn’t make any policy changes to either the short-term policy rate or Yield Curve Control (YCC) at Governor Ueda’s second meeting today. There was also no change to the Bank’s less upbeat …
Policymakers are likely to raise the policy rate by 50bp to 2% next Thursday, despite inflation falling sharply this year. And SNB Chairman Thomas Jordan’s view that Switzerland’s neutral interest rate might be around 2% suggests that there will be …
15th June 2023
Although we no longer expect Gilts to outperform in local-currency terms, we do think they’re set to hold up better against Treasuries and Bunds over the rest of this year than they have done lately. Gilts have seen a renewed sell-off lately. The 10-year …
The ECB raised its deposit rate to 3.5% today and President Lagarde all but promised another hike next month. Our baseline forecast remains that interest rates will peak in July and stay there until the middle of next year but the chances of another hike …
Bank of England likely to raise interest by 25 basis points next Thursday, from 4.50% to 4.75% The recent persistence of inflation supports our view that rates will rise to a peak of 5.25% Rate cuts remain a distant prospect The recent persistence of …
Could SAMA step in again to support credit growth? Interbank rates in Saudi Arabia are running at their highest since 2001 following the monetary policy tightening over the past year or so and, with lingering concerns over the banking sectors liquidity, …
ECB hikes and signals more to come The ECB raised interest rates by 25bp today, as expected, and the press release implies that we can expect at least one further hike in July. We might get a bit more colour in the press conference, but whatever hints we …
The tightening of labour markets across Latin America in the past year or so has fuelled rapid wage growth in many economies and wage growth is likely to remain uncomfortably high for a while yet. Against this backdrop, even as central banks kick off …
We think the Norges Bank will follow through on its plan to raise its policy rate by 25bp next week, to 3.50%, although there is an outside chance of a 50bp hike. Either way, we think it will push its interest rate forecast up, showing a peak in the …
Taiwan’s central bank (CBC) today kept its main policy rate unchanged (at 1.875%), but with the economy struggling and inflation set to fall further, we expect it to start cutting rates in September. The decision today was correctly predicted by 19 of …
Stage set for rate cuts later in the year Taiwan’s central bank (CBC) today kept its main policy rate unchanged (at 1.875%), but with the economy struggling and price pressures set to ease further, we expect the central bank to start cutting interest …
As expected, the Fed held its policy rate unchanged at between 5.00% and 5.25% today, but it made clear in the accompanying statement that pause was only to allow officials to “assess additional information and its implications for monetary policy”. In a …
Recession will drive RBNZ to cut rates by Q4 The contraction in Q1 GDP means that a recession is now well under way in New Zealand. Accordingly, we’re sticking with our forecast that the RBNZ will shift gears and start cutting rates before year-end. The …
Fed pauses as expected but, in hawkish move, eyes 50bp in additional rate hikes As expected, the Fed held its policy rate unchanged at between 5.00% and 5.25% today, but it made clear in the accompanying statement that pause was only to allow officials to …
14th June 2023
While selling its exchange-traded fund (ETF) holdings at book value to the government wouldn’t impair the Bank of Japan’s balance sheet, we don’t think it would provide the boost to fiscal revenue that policymakers seem to be hoping for. And while the …
We think UK real GDP rose a bit in April (07.00 BST) Euro-zone industrial production probably edged up in April (10.00 BST) We expect the Fed to leave interest rates unchanged (19.00 BST) Key Market Themes The 10-year Gilt yield has continued to march …
13th June 2023
With inflation still running hot, the Bank of England has little choice to keep raising interest rates. But how high will policymakers take Bank Rate, and – with headlines dominated by news of 6% mortgage rates – what will that mean for the UK economic …
Click here to read full text. Overview – Sub-Saharan Africa is set to record its weakest growth this year, outside of the pandemic, since 2016 as the drags from domestic headwinds are exacerbated by a less favourable external environment. Our GDP growth …
This report was first published in response to the PBOC’s cut to its 7-day reverse repo rate. It has since been updated to reflect subsequent developments. 13th June: Additional analysis and charts added. 15th June: Coverage of MLF cut added. 20th June: …
Overview – The RBI’s tightening cycle has come to an end and, as the economy comes off the boil and inflation settles at comfortable rates, we think interest rates cuts will materialise in early 2024. Over the longer term, India’s growth prospects are …
12th June 2023
Pakistan’s central bank (SBP) left its main policy rate unchanged today at 21%, but we think this represents a pause rather than an end to the SBP’s tightening cycle. With inflation well above target and concerns about the external position unlikely to …
The suspension and potential removal of Godwin Emefiele as Nigeria’s central bank governor raises hopes that there will be a shift away from the current unorthodox and interventionist monetary and exchange rate policies. A large devaluation of the naira …
Overview – The economy held up better at the start of the year than we had anticipated, but we still expect it to enter a recession in the second half of the year. Even though underlying inflation probably hasn’t peaked yet, we suspect the Bank of Japan …
The fall in employment in May suggests the Bank might not need to follow its 25bp hike this week with another in July. But with employment among prime-age people continuing to rise strongly and house prices surging last month, we still suspect the Bank is …
9th June 2023
Petro crisis sparks rally in Colombian assets Colombia stumbles from political crisis to political crisis. After a major cabinet reshuffle in April, this week’s scandal included allegations of phone tapping and violation of campaign financing rules and …
Note: We’ll be discussing whether China’s post-zero-COVID recovery is already over in an online briefing at 09:00 BST/16:00 SGT on 15th June . Register now . Property support of limited use in isolation Stocks of Chinese property developers surged …
The euro-zone has fallen into recession, albeit only by the finest of margins – the economy contracted by 0.1% q/q in both Q4 last year and Q1 this year. The consensus view is that the worst is now behind us and that growth will accelerate, presumably in …
We expect the Fed to leave interest rates unchanged at next week’s FOMC meeting but, in what could be characterised as a “hawkish skip”, to signal via forward guidance (updated SEP forecasts and language in the statement) that officials are minded to hike …
Central Bank Drop-In (15th June): We’ll be discussing the Fed and ECB June decisions and previewing the Bank of England’s upcoming meeting in a 20-minute online briefing at 10:00 EDT/15:00 BST on Thursday . Register Now. We learnt this week that the …
Central Bank Drop-In (15 th June): We’ll be discussing the Fed and ECB June decisions and previewing the Bank of England’s upcoming meeting in a 20-minute online briefing at 10:00 EDT/15:00 BST on Thursday . Register Now. The OECD joined the ranks of the …
CBR turns its hawkish rhetoric up a notch Russia’s central bank left rates on hold at 7.50% as expected today, but delivered an even more hawkish message as it said that pro-inflation risks have increased further and that it will consider the need to hike …
RBI hawkish, but inflation outlook improving The Reserve Bank of India (RBI) didn’t throw up any surprises when it kept the repo rate on hold at 6.50% this week. The move was widely expected and the muted reaction in local financial markets suggests that …
Rate hikes will drive double-dip housing downturn The big news this week was RBA Governor Lowe indicating that the Board’s patience to tolerate high inflation was waning. The Bank’s hawkish turn, coming at a time when unit labour costs are growing at …
Ueda resolutely dovish despite continued strengthening of price pressures Yield Curve Control here to stay at least until conclusion of review next year Inflation set to fall sharply next year which will make it difficult to abandon YCC The Bank of …
ECB almost certain to raise interest rates by 25bp next week. And likely to have a bias towards further tightening. We expect Lagarde to emphasise that policy will remain tight for a long time. A 25bp interest rate rise next week, taking the deposit …
8th June 2023
A handful of EM central banks were quick out of the blocks to tighten monetary policy in 2021 and one of the key lessons of the past year or so is that underlying inflation pressure is still proving incredibly hard to beat. The fight against inflation …
Overview – The region’s strong start to the year is unlikely to be sustained and we expect growth across Latin America to come in weaker than most expect this year and next. Inflation will continue to fall, but core price pressures are likely to remain …
Inflation drops, but rate cuts still some time away Headline inflation in Mexico dropped to a 21-month low of 5.8% y/y in May and will continue to decline over the coming months. That said, the strong labour market and rapid wage growth mean that …
The RBI’s decision to keep the repo rate on hold (at 6.50%) today comes as no surprise given the recent sharp drop in inflation. The central bank continues to strike a hawkish tone and the door remains ajar for further hikes. But with headline inflation …
RBI could be laying groundwork for cuts before long The RBI’s decision to keep the repo rate on hold (at 6.50%) today comes as no surprise given the recent sharp drop in inflation. The door remains ajar for further hikes but with headline inflation set to …
June pause to be followed by July hike, taking rates to a peak of 5.25%-5.50% Labour market resilience means we now don’t expect rates to be cut until Q1 next year Fed funds target range to fall to 2.75%-3.00% by end-2024 There appears to be enough …
7th June 2023
