Filtered by Topic: Monetary Policy Use setting Monetary Policy
EM Drop-In (6th Apr.): Our latest EM online briefing is all about the risks around the recent bank turmoil, including potential economic spill-overs and the state of EM bank balance sheets. Register now . Spill-overs to EMs from the turmoil in the global …
29th March 2023
Further tightening unlikely The Bank of Thailand (BoT) raised its main policy rate today by 25bps, to 1.75%. While most analysts expect at least one more hike we think a sharp drop in inflation will allow the central bank to hold fire and that this marks …
The RBNZ will temper rate rises, but continue hiking to 5.25%. The Bank will look past the disruption to activity driven by Cyclone Gabrielle. Even so, recession-induced disinflation will pave the way for rate cuts by year-end. With the latest economic …
Overview – Much of the economic boost from China’s reopening has already happened. While there is still some upside to consumer and services activity, weakened balance sheets and limited policy support mean the recovery will probably fizzle out by …
RBA has signalled that it will consider pausing its tightening cycle next week On balance, the economic data are consistent with a pause Final 25bp rate hike in May to be followed by cuts in Q2 2024 The RBA has signalled a pause in its tightening cycle at …
While CPI inflation will fall from 10.4% to around 3.5% this year, we think a recession involving a peak-to-trough fall in real GDP of around 1.0% is needed to ensure that domestic price pressures weaken to levels consistent with the 2.0% inflation …
28th March 2023
Overview – The euro-zone economy is set to perform much worse than consensus forecasts suggest over the next two years, with a recession looking likely. That is mainly because monetary policy and bank lending conditions are tightening. We expect …
Recent turmoil in the banking sector may have been a US and European story, but there are potentially important angles for Emerging Market investors. Our latest EM Drop-In explored the economic spill-over risks from the recent panic and the …
MNB to keep rates higher for longer as inflation risks persist Hungary’s central bank (MNB) left its benchmark base rate on hold today (at 13.00%) and it is looking increasingly likely that this rate will not be cut until Q4 at the earliest. The phasing …
Softness in retail sales raises risk of RBA pause The tepid rise in retail sales in February all but locks in a contraction in sales volumes in Q1. We think that a stronger rise in services spending will help keep private consumption buoyant this quarter. …
Softness in retail sales raises risk of RBA pause The tepid rise in retail sales in February all but locks in a contraction in sales volumes in Q1 and adds to the case for the RBA pausing its rate hiking cycle next week. The 0.2% m/m rise in retail sales …
One of the main channels through which the Gulf countries are exposed to worries about the health of the global banking system in through energy markets, with the price of Brent crude falling by 13% so far this month. If prices were to stay at current …
24th March 2023
Bolivia walking into a crisis Bolivia’s balance of payments problems entered a more acute phase this week. Commercial banks stopped providing FX to residents, forcing the central bank to do so itself. And there was some doubt (now resolved) whether the …
The flash PMIs for March suggest that not only did advanced economies avoid recession in Q1, but the outlook for activity has improved as well. However, we still think the hit from higher interest rates will intensify . And with services price pressures …
SARB to follow CBN in delivering dovish hike Nigeria’s central bank shrugged off the recent banking sector turmoil and kept its eye firmly focussed on tackling inflation as it hiked interest rates this week and, on balance, we think the South African …
As we discussed in our “Drop In” webinar after this week’s Bank of England policy decision (see here ), the 25 basis points (bps) hike in interest rates, from 4.00% to 4.25%, could prove to be the end of the tightening cycle. But it is the data on the …
The Fed will need to wait at least another few weeks for clearer evidence of the impact from the recent banking sector turmoil, but we expect economic weakness will convince officials to move to the side-lines before long. Although the Fed pressed ahead …
Norges Bank and SNB raise rates Undeterred by global banking turmoil, the Norges Bank and SNB focused on inflation this week and – in line with decisions by the ECB, Bank of England and the Fed – raised interest rates. The Norges Bank lifted its policy …
A few key points on Europe’s banks We discussed the recent turmoil in the banking sector in a Drop-in this week. (See here , or you can listen to a shorter version on our podcast here .) The big picture is that there are reasons to be cautiously …
Overview – High interest rates and weak export demand will weigh on the region’s economies this year, and we expect below-trend and below-consensus growth in most countries in 2023. The exceptions are China, which has rebounded strongly on the back of a …
The dovish tone of the RBA's March minutes has heightened the risks to our forecast for two more 25bp rate hikes in April and May. However, the Board did reiterate that its decision regarding a pause would hinge on the economic data released before its …
Financial markets across Sub-Saharan Africa have struggled – and have underperformed their EM peers – since the global banking sector turmoil erupted. Amid broad risk-off sentiment, African sovereign dollar bonds have sold off nearly across the board and …
23rd March 2023
The Bank of England followed the Fed’s example by forging ahead today with a 25 basis point (bps) interest rate hike, taking rates from 4.00% to 4.25%. This could prove to be the last hike of the tightening cycle. But if wage growth and CPI services …
Crisis of confidence at crunch CBE meeting The Central Bank of Egypt’s decision in February to leave interest rates on hold looks to have been a policy misstep and, with inflation surging and growing concerns over the commitment to orthodox policymaking, …
This webpage has been updated with a Table and Chart of the key figures. Stronger services inflation to keep Banxico tightening Mexico’s headline inflation rate dropped back by more than expected, to 7.1% y/y, in the first half of March but the further …
CBRT keeps rates on hold after one-off cut in February Turkey’s central bank (CBRT) left its key policy rate on hold at 8.50% today as policymakers kept monetary conditions loose to support activity after the earthquakes in February. Interest rates are …
This morning’s 50bp interest rate hike by the Swiss National Bank (SNB), to 1.50%, was in line with expectations and shows that, like the ECB and Fed, Swiss policymakers have not been distracted from their inflation-fighting task by problems in the …
In a surprise move, Taiwan’s central bank (CBC) today raised its main policy rate by 12.5bps (to 1.875%), but with the economy struggling badly and inflationary pressures set to ease further, we think this was the last hike of the tightening cycle. The …
The Norges Bank’s 25bp rate hike today was accompanied by new verbal guidance that it is likely to raise rates further in May. Together with the new, higher interest rate forecast, this supports our view that the policy rate will peak at 3.5% and stay …
The central bank of the Philippines (BSP) today slowed the pace of tightening as it raised its main policy rate by 25bps (to 6.25%), and hinted that the tightening cycle was now approaching an end. Although inflation has now started to fall, it remains …
SNB looks through Credit Suisse turmoil and hikes by 50bp This morning’s 50bp interest rate hike by the SNB, to 1.50%, was in line with expectations and shows that, like the ECB and Fed, Swiss policymakers have not been distracted from their …
The statement accompanying the Brazilian central bank’s decision to keep the Selic rate unchanged at 13.75% yesterday will have disappointed some (not least in the government) that thought global market turmoil and economic weakness might prompt a quicker …
Norges Bank not done yet The Norges Bank’s 25bp rate hike was accompanied by new guidance signalling that it is likely to raise rates further in May. Together with the new, higher interest rate forecast, this supports our view that the policy rate will …
Surprise hike, but cuts still likely in H2 In a surprise move, Taiwan’s central bank (CBC) today raised its main policy rate by 12.5bps (to 1.875%), but with the economy struggling badly and inflationary pressures set to ease further, we think this was …
More tightening still to come The central bank of the Philippines (BSP) today slowed the pace of tightening as it raised its main policy rate by 25bps (to 6.25%), and hinted that the tightening cycle was now approaching an end. Although inflation has now …
The 25bp rate hike and new projections unveiled by the Fed today were towards the more dovish end of potential outcomes. Despite recent strong economic data, officials acknowledged the likely hit from the banking sector turmoil and left their end-year …
22nd March 2023
Fed opts for dovish hike The 25bp rate hike and new projections unveiled by the Fed today were towards the more dovish end of potential outcomes – with officials acknowledging the likely economic hit from recent banking sector turmoil and leaving their …
Bank likely to be feeling more confident about inflation outlook The latest Summary of Deliberations reveals that the Bank of Canada is not overly concerned by signs of sticky core inflation elsewhere, but the Bank still needs to see more evidence of …
Although the recent flare-up of financial stability concerns has been a US-Europe story, its reverberations could be global. Economists from across our Asia coverage held a special online briefing about what the turmoil in the banking sector could mean …
Recent data suggest the economy’s strong start to the year was mostly sustained in February, with consumption growth set to accelerate in the first quarter, payroll employment growth robust and, partly reflecting that strength, core inflation still much …
Spill-overs from the turmoil in the global banking system to India have been limited so far, but the big unknown is whether difficulties will flare up at home. Bank problems can arise via multiple channels. There may be banks that have not adequately …
Strains in the global banking sector have flared up at a time when Latin America was in the midst of a period of economic weakness. Regional GDP fell in the final quarter of last year and surveys for early 2023 have been soft. Latin America’s banks have …
Jump in core inflation seals the deal on a 25bp hike next week The rise in South Africa’s headline inflation rate, to 7.0% y/y, in February may be a sign that the intensification of loadshedding in recent months is fuelling price pressures. So long as …
Reacceleration in inflation supports the case for another rate hike The reacceleration in CPI inflation in February may be enough to tilt the Bank of England towards raising interest rates from 4.00% to 4.25% tomorrow despite the recent turmoil in the …
Reacceleration in inflation may force 25bps rate hike The reacceleration in overall CPI inflation from 10.1% in January to 10.4% in February (consensus 9.9%, BoE 10.2%) and core inflation from 5.8% to 6.2% (consensus 5.7%) may be enough to tilt the Bank …
RBA not done hiking yet The minutes of the RBA’s latest meeting confirm that the RBA is close to ending its tightening cycle, but we suspect that the strength of the latest labour force data will prompt it to deliver two more 25bp rate hikes. Contrary to …
21st March 2023
Overview – The RBI’s tightening cycle is in its final throes and, as the economy softens and inflation drops back to within the central bank’s 2-6% target range, we think rates cuts will materialise in early 2024. Over the longer term, India’s growth …
20th March 2023
Clients can access all our latest research on the banking sector crisis here … … and catch-up on today’s Drop-in on the topic here Canada’s CPI inflation probably fell to 5.4% in February, from 5.9% in January (12.30 GMT) Key Market Themes Financial …
Click here to read the full report Overview – Both the RBA and the RBNZ have more work to do to rein in the recent surge in inflation. That aggressive monetary tightening is starting to take its toll on economic activity and we expect GDP growth to slow …
Markets remain in a febrile state despite the weekend deal for UBS to buy Credit Suisse and a joint central bank statement pledge to beef up dollar liquidity support. What will it take to restore confidence and end this crisis? Economists from across our …
