Filtered by Topic: Monetary Policy Use setting Monetary Policy
25bp hike next week likely to be the last, with rates peaking at 5.00%-5.25% Economic weakness and falling inflation to prompt rate cuts later this year We expect fed funds target range to have fallen to 2.50%-2.75% by end-2024 The Fed looks set to …
26th April 2023
Vietnam became the first country in the region to start loosening policy when it lowered its refinancing rate at the end of March. We don’t think it will be long before other central banks in Asia start to cut rates, with the Bank of Korea set to be next, …
Balance of payments strains have prompted Egypt, Morocco and Tunisia to turn to the IMF over the past six months or so, but agreements in Egypt and Tunisia are faltering. The IMF postponed its first review of Egypt’s deal amid the government’s slow …
Table of Key Forecasts Overview – Headline inflation looks set to fall sharply as energy effects subside and the let-up in product shortages reduces goods inflation further. We also expect services inflation to decrease as demand weakens, allowing …
With the ECB poised to raise rates next Thursday, the Riksbank has got its retaliation in early, hiking its key rate by 50bp. The statement indicates that policymakers expect to raise rates by another 25bp at most but, on balance, we think a further 50bp …
Inflation moderating, but still far too strong to be consistent with RBA’s target Further tightening needed to return inflation to target by mid-2025 Rate cuts will start a bit later than most expect; our forecast is Q2 2024 Note: We’ll be discussing the …
RBA will deliver a final 25bp rate hike next week While inflation is moderating slightly faster than the RBA had anticipated, price gains remain far too strong to be consistent with the Bank’s 2-3% inflation target and we’re sticking to our forecast of a …
Inflation will only return to target in H2 2024 While inflation is moderating slightly faster than the RBA had anticipated, price gains remain far too strong to be consistent with the Bank’s 2-3% inflation and we’re sticking to our forecast of a final …
The Hungarian central bank (MNB) slashed the upper end of its interest rate corridor today by 450bp, to 20.50% and, while this move alone won’t loosen monetary conditions, it is likely to be followed by cuts to the effective policy rate (the overnight …
25th April 2023
MNB kickstarts loosening cycle The Hungarian central bank (MNB) slashed the upper end of its interest rate corridor today by 450bp, to 20.50%, and while this move alone won’t affect monetary conditions, it is likely to be followed by cuts to the effective …
There’s little evidence (so far) that the surge in interest rate is leading to widespread debt servicing problems in Chile’s private sector, but there are pockets of vulnerability in the household sector. Although we don’t expect a wave of defaults in the …
EM central banks have, in general, remained in hawkish mood over recent weeks. Tightening cycles have continued in Mexico, Colombia and South Africa in response to high inflation, while policymakers in Egypt and Pakistan among others have raised …
24th April 2023
Fall in inflation unlikely to be enough to prevent a final 25bp rate hike The fall in Mexico’s headline inflation rate to an 18-month low of 6.2%y/y in the first half of April was broad-based and will provide some comfort to officials at Banxico that …
Sticky price pressures strengthening hawks’ hand Recently-released inflation figures out of Sub-Saharan Africa’s two biggest economies are likely to put pressure on policymakers in Nigeria and South Africa to raise interest rates further. March CPI data …
21st April 2023
Once again the PMIs suggest that real activity in advanced economies continues to shrug off the effects of higher interest rates. According to the flash PMIs, GDP and employment growth both got off to a strong start in Q2, even amid the banking sector …
We now expect the Fed to press ahead with another 25bp rate hike at the FOMC meeting early next month but, with the economic data softening and the risks of a debt ceiling crisis rising, we still think the Fed’s next move after that will be a cut. The …
We held an online Drop-In yesterday to present our new financial conditions indices and discuss how conditions have evolved in the wake of SVB’s collapse. (See a recording here ). This Update addresses some of the questions we received, a couple of which …
MNB takes its first steps towards interest rate cuts The deputy governor of the Hungarian central bank (MNB) made a splash this week by signalling that policymakers may cut the upper end of the bank’s interest rate corridor at their meeting next Tuesday. …
The stubbornness of CPI inflation in March, which seems more marked than elsewhere (see here ), has left us more comfortable than we were at the start of this week with our view that the Bank of England will raise interest rates by 25 basis points (bps) …
More signs of economic resilience… GDP data due next week are likely to confirm that, after stagnating in Q4, the euro-zone economy returned to growth in Q1. We have pencilled in a 0.2% q/q expansion in the region as a whole, with positive outturns in …
Door remains ajar for further tightening… The minutes of the MPC’s April meeting – in which the committee voted unanimously to keep the repo rate on hold (at 6.50%) for the first time in a year – were published this week. While it has been clear for some …
Note: We’ll be discussing the BOJ’s April decision and the fate of YCC in a 20-minute online briefing at 09:00 BST/16:00 SGT on Friday, 28th April . Register here . GDP growth falling short of expectations, but price pressures increasingly broad-based …
Note: We’ll be discussing the BOJ’s April decision and the fate of YCC in a 20-minute online briefing at 09:00 BST/16:00 SGT on Friday, 28 th April . Register here . BoJ will signal inflation target close to being met The Bank of Japan will release …
India is benefitting from maintaining its historic unaligned stance in tensions between the US and Russia. Since the start of the war in Ukraine, India has been ramping up oil imports from Russia to take advantage of discounted prices. (See Chart 1.) And …
20th April 2023
As the new Bank of Japan Governor prepares to chair his first policy meeting, the future of the Yield Curve Control policy is again in focus. Will Kazuo Ueda bring continuity or change? Marcel Thieliant , who leads our Japan coverage, Japan Economist …
The recommendations by the RBA’s review panel unveiled today were broadly in line with what we had anticipated. While the 2-3% inflation target will be retained, sweeping changes to the Bank’s leadership structure are underway. And with a lot of the …
Inflation is coming off the boil Although inflation in Q1 was below what the RBNZ had expected, we don’t expect the Bank to take its foot off the brakes just yet. Indeed, with non-tradables prices continuing to rise at a rapid clip, the RBNZ is likely to …
Price pressures show signs of easing Amid ongoing concerns that non-tradables inflation will settle at an uncomfortably high level, we still expect the RBNZ to push ahead with one final 25bp rate hike in May. The 1.2% rise in consumer prices last quarter …
We think price pressures remained elevated in New Zealand in Q1 (22.45 BST) Sign-up here for tomorrow’s Drop-in on our revamped financial condition indices… …and here to catch up on yesterday’s Drop-In on China’s post-lockdown recovery Key Market …
19th April 2023
Our dataset on inflation expectations across EMs shows some encouraging falls recently and supports our view that, with EM inflation likely to fall further, monetary easing cycles will start in the coming months. However, inflation expectations remain …
We think investors’ expectations for the Fed funds rate will fall a little by the end of this year, which will push the 10-year Treasury yield a bit lower by end-2023. But we doubt lower “risk-free” rates would be enough to prevent a sharp drop in the S&P …
Latest pick-up in inflation strengthens hawks’ case South Africa’s headline inflation reading for March came in stronger than expected, at 7.1% y/y, and core inflation remains uncomfortably high for policymakers at the Reserve Bank. With persistent …
Note: We discussed our revamped FCIs and took your questions on global financial conditions in a 20-minute online briefing on Thursday, 20 th April . Watch the recording here . We have revamped our financial conditions indices (FCIs) for advanced …
18th April 2023
On hold for the rest of the year Bank Indonesia (BI) kept its main policy rate unchanged today (at 5.75%), and appeared to signal that further rate increases this year were unlikely. With inflation falling and growth easing, we expect interest rates to be …
Inflation concerns will prompt a final 25bp rate hike in May The minutes of the RBA’s April meeting reinforce our view that the decision to leave rates on hold did not signal an end to the Bank’s tightening cycle. Indeed, the Board did discuss the case …
Bank of Canada Governor Tiff Macklem used his press conference this week to push back against expectations for interest rate cuts later this year. That partly reflects the Bank’s less downbeat assessment of the economic outlook, but the nascent rebound in …
14th April 2023
The strength of the March CPI data may be enough to persuade the Fed to squeeze in a final 25bp rate hike at the early-May FOMC meeting. But with mounting evidence that economic growth is weakening again, we doubt that strength will last much longer. Core …
Data point to positive growth in Q1 The latest official activity data suggest that the euro-zone economy posted a small expansion in Q1. Admittedly, retail sales fell in February, continuing the downward trend they have been on for over a year. But lower …
The Monetary Authority of Singapore (MAS) kept policy on hold today and with the economy set to struggle and inflation likely to fall sharply over the coming quarters we expect today’s decision to have marked an end to the tightening cycle. The MAS …
MAS keeps policy unchanged while GDP contracts The Monetary Authority of Singapore (MAS) kept monetary policy on hold today and with the economy set to struggle and inflation likely to fall sharply over the coming quarters we expect today’s decision to …
The raft of EM CPI figures out this week show that headline inflation is, in aggregate, finally starting to fall significantly, and we expect it to decline further in the coming months. But core inflation is easing relatively slowly, and remains …
13th April 2023
The Bank of Canada delivered a mixed message today, noting that it is more confident inflation will decline in the next few months, but less confident that inflation will fall all the way to 2.0% as quickly as previously anticipated. Nonetheless, with the …
12th April 2023
The Bank of Canada delivered mixed messages today, noting that it is more confident that inflation will decline in the next few months but less confident that inflation will return to 2% as quickly as it previously anticipated. Nonetheless, with the …
Japan has escaped the recent banking turmoil in the US and Switzerland relatively unscathed. While banks face some risks arising from their lending exposure overseas , there are no signs of liquidity stress. And unrealised losses on bonds are less of a …
We think India’s CPI inflation fell below the RBI’s upper limit of 6% in March (13.00 BST) US CPI inflation probably dropped to 5.4% in March (13.30 BST) We expect the Bank of Canada to keep its policy rate unchanged (15.00 BST) Key Market Themes Amid …
11th April 2023
We think that the recent stress in the banking sector has had little impact on the outlook for monetary policy in the euro-zone. While there were significant outflows of bank deposits in the five months ending in February, that was due to higher …
Rise in core inflation makes 25bp hike in May very likely March’s inflation data make it all but certain that the Norges Bank will press on with its planned 25bp rate hike at the next meeting in May. The increase in headline CPI inflation from 6.3% in …
The Bank of Korea left interest rates unchanged (at 3.5%) for a second consecutive meeting today, and attempted to push back against expectations of a rate cut this year. But with the economy struggling badly and inflation continuing to ease, we are …
On hold again, first cut likely in August The Bank of Korea left its policy rate unchanged (3.5%) for a second consecutive meeting today, and we don’t think it will be long before rate cuts come onto the agenda. With the economy struggling badly and …
The local real estate board data suggest that new listings fell again in March, defying expectations that high interest rates could lead to forced home sales. With supply falling by more than demand, the risks to our house price forecasts lie to the …
6th April 2023
