Filtered by Topic: Monetary Policy Use setting Monetary Policy
Economists from our Emerging Markets and Markets teams discussed the outlook for EM financial markets in this regular dive into the big stories in EMs. In addition to their dive into what the macro picture means for the market outlook, the team answered …
27th October 2022
The hawkish language in the statement accompanying the Brazilian central bank’s decision late yesterday, at which it left the Selic rate at 13.75%, reinforces our view that the sharp fall in inflation in the last few months won’t push Copom to cut …
Egypt’s central bank has just announced that it is shifting to a more flexible exchange rate regime, which we think will result in the pound falling 18% to 24/$ by end-2023 if not sooner. The move will result in some short-term economic pain but it will …
Governor Tiff Macklem shifted his tone notably today, reassuring that the Bank was “trying to balance the risks of over- and under-tightening”, whereas previously the emphasis had stressed that it was better to tighten too much rather than too little. …
26th October 2022
Current account deficits have widened to alarming levels in Poland, Hungary, Turkey and, most of all, Romania, in recent months which has contributed to the downward pressure on currencies this year – the Turkish lira, Hungarian forint and Polish zloty …
Stubborn core inflation points to fourth consecutive 75bp rate hike But pace of tightening likely to slow as policy becomes more restrictive Recession and falling inflation to prompt rate cuts by the end of next year Fed officials are gearing up for …
Bank slows pace of tightening despite ongoing inflation concerns Today’s smaller 50 bp interest rate hike, which took the overnight rate to 3.75%, suggests that the Bank of Canada is growing confident that its actions so far will be enough to vanquish …
The reversal of Truss/Kwarteng’s fiscal policies and Rishi Sunak’s appointment as the UK’s new Prime Minister has ushered in a period of calm in UK financial markets after the recent storm. Indeed, much of the extra political risk premia on gilts that …
Bank won’t make a U-turn and will opt for another 25bp hike next week But the upside surprise in Q3 inflation points to a higher peak in interest rates With GDP growth slowing sharply next year, we still expect rate cuts from late-2023 While the …
Inflation will approach 8% by year-end Inflation was stronger than expected last quarter and will rise further in Q4. That’s consistent with our forecast that the Reserve Bank of Australia will hike rates more aggressively than most anticipate. The 1.8% …
Brazilians head to the polls on Sunday to decide who’ll become the country’s next president in a heated run-off election between incumbent Jair Bolsonaro and his left-wing rival Lula. Lula is still the front runner, but the race is looking much tighter …
25th October 2022
MNB to keep relying on unconventional tools to support the forint Hungary’s central bank (MNB) left its base rate on hold today and we expect that the central bank will continue to use its new “market stabilisation tools” to keep short-term interest rates …
Table of Key Forecasts Global Overview – Persistently high inflation and more aggressive monetary policy tightening now seem set to cause a global recession. While we had previously anticipated contractions in several economies, the gloom has spread …
Vietnam’s central bank (SBV) hiked its main policy rate by a further 100bp (to 6.0%) yesterday at an unscheduled meeting as it attempted to support the currency. With the dong likely to remain under downward pressure, further hikes are likely. …
Although the energy crisis in Europe has dealt a blow to the EU’s near-term green ambitions, a combination of economic incentives, NextGenEU funding, and geopolitical expediency will cause the bloc to re-double its decarbonisation efforts. However, …
24th October 2022
Overview – Economic growth in most countries looks set to slow sharply next year as weaker exports and higher interest rates weigh on activity. With price pressures starting to ease, we expect central banks to begin to shift their focus from containing …
The data released this week showed that higher interest rates are yet to have much of a negative impact on construction or consumption and that core inflation is proving stickier than anticipated. This has prompted us to upgrade our forecast for the …
21st October 2022
We do not yet know which of the three PM hopefuls (Boris Johnson, Rishi Sunak, Penny Mordaunt who have attracted early backing from Conservative MPs) will replace Liz Truss. The candidates that gain more than 100 nominations from MPs will be whittled …
Unemployment still low in September Data for Sweden in September show the labour market remained tight. Admittedly, employment fell on the month and the unemployment rate edged up from 6.9% in August to 7.0%. (See Chart 1.) But the monthly numbers are …
The main message from our latest quarterly Euro-zone Economic Outlook , which we published this week, is that we now expect the euro-zone to experience an even more extreme case of stagflation. We now forecast both headline and core inflation to average …
Minutes signal RBA not done yet The RBA this week signalled that even though it slowed the pace of tightening at its last meeting, it is not done yet. In a speech on Wednesday, Deputy Governor Bullock showed that the higher frequency of the RBA’s policy …
Overview - We expect greater stimulus next year. But with the zero-COVID policy here to stay, an abrupt turnaround in property construction unlikely and exports set to fall, policymakers face an uphill battle. Growth will remain depressed. Consumer …
Policymakers in Turkey have doubled down on their new economic model of “lira-isation” by pursuing more extreme de-dollarisation policies in recent months. These appear to be having an impact in terms of stemming lira depreciation. But the central bank …
20th October 2022
It is a close call but we think a 100bp hike most likely next week. Further rate hikes will follow, bringing the deposit rate to a peak of 3%. But the hawks’ hopes to shrink the balance sheet will go unfulfilled. The ECB is certain to opt for another …
Economists from across our Asia teams were online for this 20-minute briefing on the region’s big investment stories. During this session, the team answered client questions about what’s happening in Asian economics and markets as they addressed current …
Paul Ashworth, our Chief North America Economist, and Stephen Brown, who leads our coverage of Canada’s economy, held a client briefing shortly after the BoC’s October meeting. The team addressed key issues, including: Whether the Bank will accept a …
Economists from our ANZ and Global Markets teams were online shortly after the release of Q3 CPI data for a 20-minute briefing in which they answered client questions and addressed key issues, including: Whether higher interest rates will push the …
CBRT inches further into the unknown Turkey’s central bank stepped up its easing cycle with a 150bp interest rate cut (to 10.50%) today but hinted that the easing cycle will end next month. Even so, policymaking is stretching further into the unknown and …
Euro-zone Drop-In: Deeper recession and more persistent inflation …
Bank Indonesia today raised its main policy rate by 50bp (to 4.75%), and further rate hikes are likely in the near term as the central bank looks to support the currency and clamp down on inflation. A rate hike today was always likely, the only question …
Board will lift FY2022 inflation forecasts but signal below-target inflation further ahead High inflation is triggering larger pay hikes but that won’t last Even a hawkish successor for Kuroda would struggle to tighten during a global recession The …
BI has more work to do Bank Indonesia today raised its main policy rate by 50bp (to 4.75%), and further rate hikes are likely in the near term as the central bank looks to support the currency and clamp down on inflation. A rate hike today was always …
The continued strength in inflation will encourage the Reserve Bank of New Zealand to hike the overnight cash rate by 75bp in November and to 5.0% by mid-2023. And with the financial markets sharply repricing the peak in the cash rate, a further surge …
Improvement in headline CPI inflation not matched by core Consumers’ near-term inflation expectations continue to rise Not enough evidence yet for the Bank to slow the pace of its tightening Governor Tiff Macklem has told us that the Bank of Canada …
19th October 2022
EM tightening cycles have continued apace but, having started raising rates much earlier than their DM (and Asian) peers, some central banks in Latin America ( Brazil , Chile ) and Emerging Europe (Czech Republic, Poland) are drawing their hiking cycles …
Overview – Latin America is running into a growing set of headwinds, from the global recession to lower commodity prices to tight policy at home. We expect recessions in Chile and Argentina, and our growth forecasts across most of the region for 2022-23 …
Strength of core inflation points to another 75 bp hike The Bank’s core CPI inflation measures were unchanged in September but, as we expected a decline due to more favourable base effects, that increases the odds of another 75bp interest rate hike next …
The RBI continued frontloading policy tightening in its late-September meeting with another 50bp hike to the repo rate (to 5.90%) but communications since then suggest that some MPC members are ready to ease off the brakes. The minutes to that meeting …
Inflation ticking down, but monetary policy to remain hawkish While South Africa’s headline rate edged down to 7.5% y/y in September, the surprising strength of core inflation will push policymakers to deliver another 75bp hike in the benchmark interest …
Strong inflation will prompt further rapid tightening The much stronger than expected rise in consumer prices in Q3 will encourage the Reserve Bank of New Zealand to hike rates by another 50bp at its November meeting and poses upside risks to our view …
17th October 2022
Strong inflation will prompt further rapid hikes The much stronger than expected rise in consumer prices in Q3 will encourage the Reserve Bank of New Zealand to hike rates by another 50bp at its November meeting and poses upside risks to our view that it …
Mixed messages on inflation expectations The Bank of Canada’s quarterly surveys offer some evidence that aggressive policy tightening is having the intended effects, with widespread fears of recession leading to a moderation in wage expectations and an …
Inflation nearing peak The rise in Nigeria’s headline inflation rate to a 17-year high of 20.8% y/y last month reinforces our view that policymakers will raise the benchmark rate by a further 100bp, to 16.50%, in November. That will likely mark the end of …
With the yen currently trading just below 149, it now appears to be a question of when and not if policymakers step in again. But as recent weeks and the Asian Financial Crisis have shown, such interventions alone can’t reverse yen weakness. An even …
Central banks bringing things to a close This week, Chile ’s central bank became the latest in the region to end its rate hiking cycle. The statement accompanying its 50bp policy rate hike, to 11.25%, on Wednesday mentioned that the policy rate “has …
14th October 2022
We still think it’s only a matter of time before the easing of inflationary pressure evident in the surveys and other private-sector data shows up in the official figures. But the September CPI report points to the Fed hiking by another 75bp not just in …
Governing Council members were out in force this week giving their euro cent’s worth on the monetary policy outlook. Sifting through the various comments, there are three main takeaways. First, even the most hawkish are not prepared, in public at least, …
Sweden: consumer prices vs house prices September’s consumer price data were very strong. But there has been a sharp slowdown in the housing market which could mean that the Riksbank’s tightening cycle comes to an end soon. The increase in headline …
Inflation & external pressures force the MNB’s hand The surprise decision by Hungary’s central bank (MNB) to tighten monetary policy further today underscores that the economy is facing much stronger inflation and external pressures than its regional …
