Filtered by Topic: Monetary Policy Use setting Monetary Policy
This week’s FOMC meeting may have dashed hopes that the Fed will follow the recent dovish tilts of some other central banks. But we still think Fed officials are underestimating the degree to which their aggressive rate hikes will put downward pressure on …
4th November 2022
ECB Governing Council members had a busy week, with just under half of them giving speeches or interviews on the outlook for monetary policy. There are four key takeaways from their comments. First, rates will rise further. All policymakers who spoke …
Falling inflation may keep SNB in check The reductions in headline and core inflation in Switzerland in October confirm that inflation has now passed its peak, and both measures look set to continue on a downward path next year. (See here . ) We don’t …
This week the Bank of England displayed the most extreme example of a “dovish hike” that we can recall. The hike bit; the 75 basis point rise in interest rates was the largest rise since 1992; it meant that rates have risen in each of the past eight …
Our US Economics team held a briefing shortly after the October data release, in which they answered client questions and addressed key issues around what was happening at the Fed and Congress, including: How far the Fed will raise interest rates; Whether …
RBA increasingly worried about wage-price spiral The Reserve Bank of Australia lifted the cash rate by 25bp on Tuesday as we and most other analysts had anticipated and the marked upward revision to its inflation forecasts support our view that the Bank …
Composite PMIs for Italy and Spain probably fell further in October (09.00 GMT) We think US non-farm payrolls rose by 225,000 in October (12.30 GMT) Sign-up to our Global Economics Drop-In on the upcoming recession Key Market Themes We’re inclined to …
3rd November 2022
Although the Monetary Policy Committee (MPC) raised interest rates today by 75 basis points (bps), from 2.25% to a 14-year high of 3.00%, it sent the strongest signal yet that it thinks rates won’t need to rise much above 4.00%. But with price/wage …
Dovish CNB unlikely to tighten further The Czech National Bank (CNB) left its policy rate on hold, at 7.00%, for a third consecutive meeting today. With inflation nearing a peak and the economy now contracting, we think rates will be left unchanged over …
The RBI’s out-of-cycle meeting today concluded with no decision on interest rates. That’s no surprise – it was called for administrative reasons, rather than as a response to changing economic conditions. We believe that further tightening will still be …
Dovish tilt, but rates may still rise to 5.00% Although the Monetary Policy Committee (MPC) raised interest rates today by 75bps, from 2.25% to a 14-year high of 3.00% (consensus 3.00%), it sent a strong signal that it is unlikely to raise rates to the …
The surge in energy prices this year has led to a sharp widening in Hungary’s current account deficit and increased its dependence on foreign capital inflows. While the central bank (MNB) seems to have put a floor under the currency recently, it remains …
Today’s decision by the Norges Bank to slow the pace of rate hikes is the beginning of the end for its tightening cycle. But we don’t expect a pivot towards interest rate cuts next year. The Bank signalled at its last meeting that after raising its policy …
Falling inflation will allow SNB to raise rates less than others The decline in both core and headline inflation in October supports our view that Switzerland has passed peak inflation. We expect further falls in the coming months which will allow the …
The Nigerian central bank’s plans to replace high-value bank notes by the end of January will, if India’s experience in 2016 is anything to go by, disrupt activity and fail to address some of the problems (e.g. illicit activity) that policymakers are …
Malaysia’s central bank (BNM) raised its main policy rate by 25bp (to 2.75%) today, but with inflation falling and growth set to slow, we think the tightening cycle is nearing an end. Today’s move came as little surprise and was accurately predicted by …
BNM closing in on the finish line Malaysia’s central bank (BNM) raised its main policy rate by 25bp (to 2.75%) today, but with inflation falling and growth set to slow, we think the tightening cycle is nearing an end. Today’s move came as little surprise …
The Fed raised its policy rate by another 75bp today, to between 3.75% and 4.00%, but laid the groundwork in the accompanying statement for a downshift to a 50bp hike at the next meeting in mid-December. With Chair Jerome Powell noting repeatedly that the …
2nd November 2022
Labour market strength will encourage RBNZ to hike by 75bp this month New Zealand’s labour market remained very tight last quarter and coupled with the continued strength in inflation. the RBNZ will probably hike by 75bp in a couple of weeks. The 1.3% q/q …
1st November 2022
This dashboard gives a holistic overview of financial conditions across major developed economies. It presents our proprietary financial conditions indices (FCIs) as well as a selection of input variables used in our FCIs. Our FCIs indicate the ease with …
The dovish tilt among central banks has led to more talk of “pivots”, but this will mean different things for different banks. The ECB may be shifting to a slower pace of tightening, but the peak in rates is still some way off. That peak is closer for …
On some measures China’s current COVID situation is about as bad as it has ever been. While far fewer infections are being found daily than at the peak of the Omicron wave, new cases are geographically spread just as wide, with the result that the …
The Reserve Bank of Australia hiked rates by 25bp today and the upward revision to its inflation forecasts are consistent with our view that rates will peak at an above-consensus 3.85%. However, we still see a good chance that policy will be loosened …
RBA will lift rates more sharply than most anticipate The Reserve Bank of Australia hiked rates by 25bp today and the upward revision to its inflation forecasts are consistent with our view that rates will peak at an above-consensus 3.85%. The Bank’s …
Economists from our UK Economics team held a briefing ahead of the MPC’s November meeting to discuss why we think that rates will rise further than most analysts are expecting and the conditions that would be needed for the Bank to shift to a slower pace …
31st October 2022
Central banks across the region have been stepping up the pace of intervention in foreign exchange markets to support their currencies, resulting in a drop in FX reserves. In most countries, reserves are down by around 10% from their recent peaks, and …
The past month has brought further signs that economies across Sub-Saharan Africa are in the midst of a slowdown. The latest activity data out of South Africa suggest that, after GDP contracted in Q2, its economy fell into a technical recession in Q3. …
The Bank of Canada now judges that there is a 50/50 chance of GDP growth turning negative, which caused it to slow the pace of its tightening to a 50 bp hike this week and to hint that it will drop to a 25 bp at the final meeting of the year. We assume …
28th October 2022
The 2.6% annualised rise in third quarter GDP was a lot worse than it looked, with growth in underlying demand grinding to a near-halt. At the same time, there are mounting signs that economic weakness will soon feed through to disinflation in core …
Russian central bank governor Elvira Nabiullina’s post-meeting press conference reinforced the message that policymakers are increasingly concerned about pro-inflationary risks, including those stemming from the recent mobilisation of reservists. That …
In general we think the data released this week are consistent with our three key calls on the euro-zone. The first is that the region is heading for a deeper recession than most anticipate. Our forecast is for a 1.8% decline in GDP in 2023 is below both …
What to expect in 2023 We published our latest Emerging Asia Economic Outlook this week, which contains our detailed forecasts. Here are three key calls from the report. Sharp slowdown ahead Growth across Emerging Asia looks set to slow sharply over the …
We published our Q4 Nordic & Swiss Economic Outlook this week. The key points are that we expect Switzerland, Sweden and Denmark to suffer recessions, while Norway might escape with only a sharp slowdown. But inflation will remain high in the Nordics and …
CBR brings its easing cycle to a halt Russia’s central bank left interest rates on hold at 7.00% today and highlighted the pro-inflationary risks stemming from the recent mobilisation of reservists. That said, we think this is likely to mark a pause in …
The RBI announced this week that it will hold an “additional” MPC meeting on Thursday 3 rd November. It’s not unusual for the committee to convene between scheduled meetings (the next meeting was due to take place in early December). Indeed, “emergency” …
Bank won’t make an about-face The stronger than expected Q3 inflation print has prompted some commentators to forecast a larger 50bp rate hike at next week’s RBA meeting following the step down from the four 50bp hikes in recent months to a smaller 25bp …
The Bank of Japan revised up its medium-term inflation forecasts while keeping policy unchanged today, but we still think that it won’t snuff out the budding virtuous cycle between incomes and wages . As widely anticipated, the Bank kept its interest rate …
Window for tighter policy is closing The Bank of Japan revised up its medium-term inflation forecasts while keeping policy unchanged today, but we still think that it won’t snuff out the budding virtuous cycle between prices and wages. As widely …
We expect the Bank of Japan to leave policy unchanged Russia’s central bank may cut its policy rate by another 50bp… (11.30 BST) …while we expect a 100bp rate hike in Colombia (19.00 BST) Key Market Themes Despite some dovish elements in today’s ECB …
27th October 2022
Rising price/wage expectations will prompt the MPC to hike rates aggressively on Thursday It’s almost 50-50 between a 75bps and 100bps hike, but we are going for 100bps Our forecast that rates will peak at 5.00% remains higher than the consensus …
The Norges Bank signalled in September that it intended to slow the pace of tightening, implying that it would hike by 25bp at the meeting next week. But with inflation data since then again coming in higher than expected, we think the Bank will opt for …
After raising rates by 75bp today, the ECB laid the groundwork for a slower pace of tightening to come. But we still think that the deposit rate will reach 3% next year. And while the Bank will set out some “key principles” for QT in December, we doubt …
Table of Key Forecasts Overview – EM GDP growth has slowed sharply this year and is likely to remain sluggish in 2023 and 2024 as weak external demand and tight financial conditions take their toll. Having started hiking rates much earlier than their DM …
ECB’s work is far from done The ECB is very likely to follow today’s 75bp rate hike with further aggressive increases in the coming months, even if we are right that the forthcoming recession will be deeper than most expect. The decision to maintain the …
Our Global Economics team held a 20-minute online briefing on the outlook for the global economy and policy on Tuesday, 8 th November. During this session, the team answered client questions as they highlighted key takeaways from their recently published …
Overview – Sub-Saharan Africa has suffered particularly heavily from the pandemic and then spillovers from the war in Ukraine, and the global recession will only add to the headwinds. Taken together with tight fiscal and monetary policy, we hold a …
