Filtered by Topic: Monetary Policy Use setting Monetary Policy
It is three years since a cluster of cases of severe pneumonia started to draw attention in Wuhan. Chart 1 maps economic developments in China since then. The blue bars show cumulative growth since the end of 2019 and the black outlines show growth over …
4th January 2023
Economists from our Global Economics service held a special discussion about the trajectory of inflation across advanced and emerging economies in 2023. During this 20-minute briefing, the team addressed key issues from their latest Global Inflation Watch …
3rd January 2023
A year to write home about 2022 was in many ways a memorable year for Latin America. With Argentina’s World Cup victory the trophy returned to Latin America for the first time in 20 years. And it’s been a good year off the pitch too. GDP growth has …
23rd December 2022
Will policy loosening come onto the agenda? A s we explained in our Outlook for Q1 2023 , the hiking cycle that has dominated the discourse for much of 2022 is likely to come to an end early next year. The question then is, when will thoughts turn to …
CBE acts aggressively to counter inflation surge and weaker pound The 300bp interest rate hike by the Egyptian Central Bank (CBE), which took the overnight deposit rate to 16.25%, suggests that policymakers are even more concerned about rising inflation …
22nd December 2022
We expect US data to show weak economic momentum in November (13.30 GMT) Clients can read our World In 2023 reports here … …and register for the related Drop-In sessions, in early January, on the same page The next edition of the Capital Daily will be …
Jump in money supply won’t worry the SNB Swiss money supply data for November, released earlier this week, showed that M3 increased at its fastest year-on-year pace since February. (See Chart 1.) This could, at least in theory, encourage policymakers to …
We think investors are still too optimistic on global growth, and that “risky” assets will struggle over the first half of 2023 as a result. Investors seem increasingly to have come around to our view on inflation over the past couple of months, namely …
CBRT on hold … for now Turkey’s central bank (CBRT) stuck to its previous guidance today and left its policy rate on hold, at 9.00%, but there is clearly a risk that President Erdogan forces the CBRT to restart its easing cycle, particularly with the 2023 …
Bank Indonesia (BI) today raised interest rates for a fifth consecutive meeting, but slowed the pace of tightening with a 25bp hike (to 5.50%). With inflation still well above target, the central bank has more work to do. But provided the currency …
Bank Indonesia slows pace of tightening, but further hikes are likely Bank Indonesia (BI) today raised interest rates for a fifth consecutive meeting but slowed the pace of tightening by raising interest rates by just 25bps (to 5.50%) from 50bp at its …
Even though we expect the Bank of England to raise interest rates further from 3.50% now to a peak of 4.50%, we doubt the recent increase in gilt yields will be sustained. Instead, we think yields may fall from 3.60% currently to 2.75% by the end of 2023 …
21st December 2022
The November CPI report marked the second successive undershoot in inflation and there is mounting evidence that it will continue to fall sharply in 2023. (See Chart 1.) Core goods prices are coming under broad-based downward pressure, as easing supply …
The renewed rise in the three-month annualised rates of CPI-trim and CPI-median inflation in November call into question the idea that the Bank of Canada has already finished its tightening cycle. Those rates are not published by either Stats Can or the …
Rate cuts to arrive in mid-2023 The Czech National Bank (CNB) left its policy rate on hold, at 7.00%, as expected again today and, with inflation set to drop sharply from Q1, we think the CNB will be one of the first EM central banks to cut rates next …
Tightening cycles have been a key feature of 2022 across the emerging world, but the end is in sight as we enter 2023. Some EM central banks that began tightening early – for example Brazil, Chile and Czech Republic – have already brought an end to …
The jump in bond yields and the further strengthening of the yen following the widening of the Bank of Japan’s tolerance band for 10-year JGB yields will lower the value of assets owned by Japanese investors. Insurance firms will be most affected by …
Headline inflation may have dropped back in Canada in November (13.30 GMT) We expect the Czech central bank to keep interest rates on hold (13.30 GMT) Sign up here for our Drop-In on Wednesday to discuss the BoJ decision Key Market Themes Although …
20th December 2022
Click here to read the full report. Table of Key Forecasts Overview – The sharp slowdown in EM GDP growth seen in 2022 is likely to be followed by further weakness across most of the emerging world in 2023. Sluggish growth and falling inflation will …
The government’s reform agenda struggled for momentum in 2022 as key state elections (notably in Uttar Pradesh in March and Gujarat in December) dominated the calendar, and surging food and fuel prices set a tricky political backdrop. But the results of …
MNB staying the course as inflation pressures persist Hungary’s central bank (MNB) left its base rate on hold again at 13.00% and is likely to use its communications later today to reaffirm its commitment to its market stabilisation tools to defend the …
Does the Bank of Japan’s surprise announcement about changes to its yield curve control policy point to a fundamental shift in its monetary stance? Is this new regime defensible? And what will these changes mean for JGBs the yen, and for financial markets …
The performance of African economies diverged early this year, but the latest data provide clearer signs that growth across the region is now slowing. Economic weakness seems most pronounced in Ghana, where the impact of the country’s sovereign debt …
Chief Global Economist Jennifer McKeown and colleagues from across our macro services held a special briefing on what to expect from major DMs and EMs in 2023. In this 20-minute session, the team will be answered client questions as they discussed the …
Wider YCC band not start of tightening cycle The Bank of Japan today tweaked its Yield Curve Control (YCC) settings by widening the tolerance band around its yield target but we don’t expect it to hike its short-term policy rate anytime soon. The Bank’s …
Bank won’t follow band widening with rate hikes The Bank of Japan today widened the tolerance band around its yield target but we don’t expect it to hike its short-term policy rate anytime soon. The Bank’s decision to keep its short-term policy rate at …
Click here to read the full report. Overview – We think the euro-zone is now at the start of a recession, driven by high inflation, tightening financial conditions and weak external demand, and anticipate two quarters of contraction followed by a gradual …
19th December 2022
Central banks across Central and Eastern Europe (CEE) have left interest rates on hold over the past month or so but their communications have continued to strike a relatively hawkish tone. Hungary’s central bank has suggested that interest rates may be …
Click here to read the full report. Overview – The challenging external backdrop means that growth across Sub-Saharan Africa is likely to slow in 2023, and by much more than most expect. Currencies are likely to weaken and public debt fears will grow, …
Click here to read the full report. Table of Key Forecasts Global Overview – We continue to expect the world to slip into recession in 2023 as the effects of high inflation and rising interest rates are felt. Our forecasts are below the consensus across …
A mooted adjustment to the joint statement between the Bank of Japan and the government has been widely interpreted as a step towards the withdrawal of ultra-loose policy. However, the policy implications of giving the Bank more flexibility in meeting its …
We expect the BoJ to leave its policy settings unchanged next week… (Tue.) …and we think central banks in Hungary, Czechia and Turkey will do likewise Indonesia’s central bank will probably slow its pace of tightening to 25bp (Thu.) Key Market Themes …
16th December 2022
Despite the Fed’s continued hawkishness, the further softening in core inflation and weakness of the early activity data in November leave us more convinced that the FOMC will be cutting interest rates again by the end of next year. Fed’s new …
Hungary strikes last minute deal, but risks remain The EU’s approval of Hungary’s COVID-19 recovery plan this week is a welcome development for Hungary’s economy and financial markets, but it won’t immediately transform the near-term outlook. On Monday, …
Despite action, inflation will stay high It was a big week with for central banks with the Fed, BoE and ECB all raising rates by 50bp. The minnows were also in on the action with 50bp hikes for the SNB and Denmark’s Nationalbank and a 25bp hike by the …
ECB a long way from pivot… Thursday’s ECB meeting has sparked significant turmoil in euro-zone financial markets. Ten-year Bund and BTP yields recorded some of their largest one-day rises in the past decade and are up ~25bp and ~50bp respectively from …
We think the three main economic themes of 2023 will be falling inflation, peaking interest rates and recession. We explained these forecasts in detail in our recent UK Economic Outlook , which carried the title a “A tough year”. (See here .) In short, …
CBR now set for extended pause Russia’s central bank kept its main policy rate unchanged at 7.50% today as it emphasised that inflation risks have become slightly more skewed to the upside. This reinforces our view that the easing cycle is unlikely to …
Rise in lending rates has further to run D ata released this week reinforce our view that domestic demand is softening. Industrial production dropped by 4% y/y in October – our in-house adjustment points to a similar-sized drop month-on-month. And …
Revisiting the energy price cap The Australian government revealed details of its energy price cap on Friday and there are two points worth making. First, the $125 cap on coal prices refers to a lower-grade type of coal than we had thought, which means …
Banxico delivers smaller 50bp dose of tightening, end of cycle close Mexico’s central bank slowed down the pace of tightening with a 50bp interest rate hike, to 10.50%, today and the accompanying statement made clear that the tightening cycle will soon …
15th December 2022
Today’s 50bp rate hike came alongside hawkish comments which are consistent with our view that the deposit rate will peak at 3%, significantly higher than the consensus forecast and a touch above what was priced into the market. The press release also …
This is part of a series of reports outlining our key macro and market calls for 2023. Click here to view the full series. Our latest Global Economic Outlook can be found here . Our 2023 prognosis may be a gloomy one, but there are reasons to expect …
The Bank of England followed the Fed by slowing the pace of interest rate hikes from 75 basis points (bps) in November to 50bps hike today as widely expected, which took rates from 3.00% to 3.50%. But unlike the hawkish Fed, the Bank sounded a touch …
More ECB rate hikes to come Today’s 50bp rate hike came alongside hawkish comments which are consistent with our view that the deposit rate will peak at 3%, significantly higher than the consensus forecast and a touch above what was priced into the …
Is the CBE eyeing up another surprise meeting? The IMF’s Executive Board meet on Friday to approve Egypt’s deal, and there are rumours the Central Bank of Egypt (CBE) could meet today to deliver a surprise aggressive interest rate hike. The CBE is …
Easing off the brakes, but hikes may not halt until rates hit 4.50% The Bank of England followed the Fed by slowing the pace of interest rate hikes from 75bps in November to a 50bps hike today as widely expected, which took rates from 3.00% to 3.50%. But …
The SNB’s 50bp rate hike, to 1.00%, was in line with expectations but, more importantly, the Bank also raised its medium-term inflation forecast slightly, hinting that policymakers believe future hikes may be needed. We now think a further 25bp rate …
Unabating price pressures to put policymakers in a bind November inflation data out of Nigeria came in stronger than expected, with the headline rate picking up to 21.5% y/y and price pressures increasing in m/m terms as well. Together with our …
