Asia Economics Update Bank Indonesia to tighten policy gradually Bank Indonesia left interest rates unchanged at 3.5% at its meeting today, and the weakness of inflation means the tightening cycle is likely to be very gradual. 10th February 2022 · 3 mins read
India Economics Update Inflation will force the RBI’s hand The recent hawkish turn by many major central banks did not faze the RBI today, which continued to project a dovish tone while keeping policy settings unchanged. But inflation risks are building and... 10th February 2022 · 3 mins read
Australia & New Zealand Economics Update RBA to hike rates to 1.75% Continued strength in underlying inflation and activity will prompt the Reserve Bank of Australia to start hiking rates in June. And we now expect the Bank to lift the cash rate to 1.75% by August... 10th February 2022 · 4 mins read
UK Economics Interest rates to peak at 2.0% We now think that Bank Rate will rise from 0.50% currently to 1.25% sooner than we previously thought. What’s more, we now expect three more 25 basis point rate rises in 2023, resulting in rates... 9th February 2022 · 7 mins read
Europe Economics Update Will ECB tightening cause a fresh crisis? Any policy tightening by the ECB in 2022-23 will probably be too limited to cause major problems in the bond market. But if interest rates rise much further than we anticipate, that could trigger... 9th February 2022 · 4 mins read
Europe Economics Update How big a problem are higher interest rates for Italy? Our base case is that monetary tightening by the ECB results in a manageable rise in Italy’s government bond yields. We think it would take 10-year yields rising to 5% or more to bring debt... 9th February 2022 · 4 mins read
Emerging Europe Economics Update NBR steps up the pace of tightening The National Bank of Romania (NBR) accelerated its tightening cycle today with a 50bp hike to its key policy rate (to 2.50%) and, with inflation firmly above the central bank’s target, we think this... 9th February 2022 · 2 mins read
Latin America Data Response Brazil & Mexico CPI (Jan.) The fall in Mexican inflation to 7.1% y/y suggests that the headline rate has peaked, but the central bank will remain concerned about rising core inflation. As such, we expect another 50bp rate hike... 9th February 2022 · 2 mins read
Asia Economics Update Thailand: rates to stay low despite jump in inflation The Bank of Thailand (BoT) left its policy rate unchanged today at 0.5%, and despite the recent rebound in inflation, we expect interest rates will remain on hold for some time to come. 9th February 2022 · 3 mins read
Capital Daily Monetary tightening & the outlook for DM corporate bonds Despite recent increases, we don’t think that corporate credit spreads in the developed world will rise much, in general, over the next couple of years. 8th February 2022 · 5 mins read
Emerging Europe Economics Update NBP maintains steady tightening as inflation risks build The National Bank of Poland (NBP) raised its policy rate by another 50bp, to 2.75%, at today’s meeting and, while there was little change in language in the statement, we think a backdrop of strong... 8th February 2022 · 2 mins read
Europe Chart Pack Shift in ECB stance poses risks to the bond market Both we and the market are now discounting 100bp of ECB rate hikes by the end of 2023. And given the sequencing set out by Christine Lagarde, it seems likely that net asset purchases will end in Q3... 8th February 2022 · 12 mins read
Emerging Markets Economics Update What higher oil prices mean for EMs If oil prices were to remain at their elevated levels, they could push current account and budget balances into surplus in many of the EM producers. It would also ease any concerns about dollar pegs... 8th February 2022 · 3 mins read
Asia Economics Update Inflation a worry in South Asia, but less so elsewhere Inflation is a growing concern for policymakers in South Asia and means interest rates are likely to rise further this year. Elsewhere in Asia, inflation remains low and is likely to fall back over... 8th February 2022 · 4 mins read
Japan Economics Focus What would it take for inflation to surge in Japan? A perfect storm of surging house prices, a further worsening of supply shortages, and a pick-up in labour mobility would be needed to cause an inflation surge in Japan. Even if inflation did reach 2%... 8th February 2022 · 17 mins read
Capital Daily EM monetary policy and LC government bond yields We don’t think government bond yields in emerging markets outside Asia will continue to rise much more rapidly than those in Asia over the next couple of years. 7th February 2022 · 5 mins read
