Filtered by Topic: Monetary Policy Region: G10 Use setting G10 Use setting Monetary Policy
Bank of Japan will hike rates again in July The Bank of Japan revised down its growth forecasts and sounded more dovish when it left policy settings unchanged today. However, we believe that the trade war won’t be as damaging as feared and we’re sticking …
1st May 2025
CPI data don’t support the case for below-neutral rates Although trimmed mean CPI gained a bit of momentum in q/q terms last quarter, it probably won’t keep the RBA from cutting rates by another 25bp at its May meeting. However, given lingering price …
30th April 2025
Strong labour market lessens the need for aggressive cuts With the labour market broadly on solid ground, we expect the RBA to deliver only a shallow easing cycle. The 32,00 rise in employment in March was a touch softer than the 40,000 increase that we …
17th April 2025
RBNZ won’t fret the modest uptick in inflation Although headline inflation in Q1 was stronger than it had anticipated, we suspect the RBNZ will take comfort from the fact that measures of core inflation continued to fall towards the mid-point of its 1-3% …
Bank holds but further cuts likely amid dovish communications The Bank of Canada’s decision to keep interest rates unchanged at 2.75% today was not a huge surprise given recent above-target gains in core prices, concerns about future price increases and …
16th April 2025
RBNZ will cut further than most anticipate The RBNZ cut rates by 25bp at its meeting today, while signalling that further easing would be forthcoming in the months ahead. We think the Bank will ultimately loosen policy settings to a greater degree than …
9th April 2025
RBA’s easing cycle will be shallow While the RBA is becoming increasingly confident that inflation will sustainably return to target, we still expect its easing cycle to be shallow. The Bank’s decision to leave the cash rate unchanged at 4.10% was …
1st April 2025
For an updated and more detailed version of this analysis, click here . Committee less committed to collection of rate cuts The Bank of England was always going to continue its cut-hold-cut-hold pattern by leaving interest rates at 4.50% today but, in the …
20th March 2025
This page has been updated with additional analysis since first publication. Labour market cooling rather collapsing With the labour market cooling rather than collapsing and wage growth stuck in the 5.5-6.0% range, we doubt the Bank of England will cut …
New Zealand economy escapes recession As expected, the New Zealand economy came out of recession at the end of last year. As the impact of recent monetary loosening filters through, we expect the recovery to continue apace in the coming quarters. The 0.7% …
19th March 2025
Fed continues to expect two rate cuts this year, while slowing QT to a crawl Although the FOMC stuck to its median projection for two interest rate cuts this year, some officials now share our view that further loosening is unlikely and we continue to …
Bank of Japan will lift rates to 1.5% by 2027 The BoJ’s decision to leave policy settings unchanged today was widely anticipated but we still think that the Bank’s tightening cycle has much further to run. After having lifted its policy rate to 0.5% in …
Bank cuts again but warns that it must protect against tariff-induced inflation Although the Bank of Canada cut interest rates by 25bp again today, it also warned that “monetary policy cannot offset the impacts of a trade war” and that it must guard …
12th March 2025
RBA will only deliver shallow easing cycle The minutes of the RBA’s February meeting are consistent with our view that the Bank will continue to ease policy but won’t cut interest rates very far. It came as no surprise that the Board debated the decision …
4th March 2025
This page has been updated with additional analysis since first publication. With price pressures remaining subdued, RBA can ease a bit further The relatively soft CPI print for January should ease some of the RBA’s concerns about the stickiness of …
26th February 2025
Fed in no hurry to resume cutting rates The minutes of the Fed’s late-January policy meeting underline that, having cut rates by a cumulative 100bp, officials are in no hurry to resume loosening monetary policy, even though most still thought the current …
19th February 2025
This page has been updated with additional analysis since first publication. Climb in inflation to 3% will be uncomfortable for the BoE CPI inflation took another step up from 2.5% in December to 3.0% in January (consensus, BoE, CE 2.8%) and will probably …
RBNZ to cut further than most expect Having handed down its third consecutive 50bp cut today, the RBNZ is likely to slow the pace of easing going forward. That said, we still think there’s a compelling case for a lower terminal rate than most are …
Wage pressures continue to soften Although the RBA will welcome the continued slowdown in wage growth, we still think it will deliver only a shallow easing cycle. The 0.7% q/q rise in the wage price index last quarter was a touch softer than most had …
RBA starts easing, but tempers expectations for further cuts When the Reserve Bank of Australia cut rates by 25bp at its meeting today, it signalled that any further withdrawal of monetary restriction would be gradual. Accordingly, we’re comfortable with …
18th February 2025
Powell gives little indication of rate cuts this year Fed Chair Jerome Powell stuck to the line that the Fed was in no hurry to adjust its policy stance in his semi-annual testimony to Congress today. Given that inflation remains above target and the …
11th February 2025
For updated and more detail analysis see here . Dovish development adds downside risk to our forecast for Bank Rate to fall to 3.50% While cutting interest rates from 4.75% to 4.50% today, which was the third 25bps cut in seven months, the Bank of …
6th February 2025
Fed moves to the sidelines The Fed left its key policy rate unchanged at between 4.25% and 4.50% and the accompanying statement suggests the FOMC is happy to remain on the sidelines, as it awaits more clarity on the potentially stagflationary mix of …
29th January 2025
Bank cuts by 25bp as 25% tariff threat hangs over the economy With the economy doing better recently, the Bank of Canada’s decision to cut by 25bp today might have been a much closer call were it not for the looming threat of US tariffs. Any tariffs could …
Soft CPI data paves the way for RBA to cut in February With underlying inflation on track to enter the RBA’s 2-3% target band this quarter, we now expect the Bank to begin its easing cycle at its next meeting in February. The 0.2% q/q rise in consumer …
Bank of Japan will lift policy rate to 1.25% next year The Bank of Japan hiked its policy rate to 0.5% today and we think it will lift it to an above-consensus 1.25% by the middle of next year. The Bank’s decision to resume its tightening cycle with a …
24th January 2025
This page has been updated with additional analysis since first publication. Tight labour market bolsters case for RBA to stay put Although we expect the labour market to cool in earnest over the course of this year, risks to our forecast that the …
16th January 2025
This page has been updated with additional analysis since first publication. Soft surprise boosts February rate cut odds While a lot of the surprisingly large fall in services inflation from 5.0% in November to 4.4% in December (CE forecast 4.8%, BoE …
15th January 2025
Fed worried by potential impact of Trump policy agenda After Chair Jerome Powell made a big fuss about claiming in last November’s press conference that the Fed wouldn’t speculate about what policies the incoming Trump administration will adopt, the …
8th January 2025
This page has been updated with additional analysis since first publication. Disinflation gathering momentum The RBA is unlikely to pay much heed to the slight pickup in headline inflation in November. In fact, with underlying price pressures showing …
Bank unlikely to cut rates before May The minutes of the RBA’s December meeting struck a slightly dovish tone. However, with the labour market still firing on all cylinders, we doubt the Board will risk loosening policy prematurely. Accordingly, we still …
24th December 2024
Surge in headline inflation won’t last, but underlying inflation to remain near target November’s surge in inflation wasn’t a surprise – the Bank of Japan will have known it was on the cards when it decided not to hike rates yesterday. But it should add …
19th December 2024
For our more detailed analysis of the Bank's December policy announcement, see here . Dovish hold supports our view that rates will be cut further and faster than market pricing While the Bank of England left interest rates at 4.75% today, it struck a …
Bank will bring in the new year with a rate hike Although the Bank of Japan left rates on hold for a third consecutive meeting, we think it will resume its tightening cycle before long. The Bank’s decision to leave the policy rate unchanged at 0.25% was …
Fed delivers a hawkish rate cut The Fed did cut interest rates by an additional 25bp today, as was largely expected, taking the fed funds rate down to between 4.25% and 4.50%. But the vote was not unanimous and, in a hawkish shift, the new median …
18th December 2024
50bp cut will not be repeated Although the Bank of Canada cut interest rates by another 50bp today, the accompanying communications were more hawkish than might have been expected, with the Bank no longer indicating that further cuts are guaranteed and …
11th December 2024
RBA will only ease policy in Q2 next year The Reserve Bank of Australia today signaled greater confidence that inflation will return towards target over the next couple of years, but we still expect the first rate cut to happen only in Q2 next year. As …
10th December 2024
RBNZ will cut rates by another 50bp in February The RBNZ didn’t provide a clear signal about the speed of future rate cuts when it lowered the overnight cash rates by 50bp today, but we think it will deliver another 50bp cut at its February meeting. The …
27th November 2024
Fed slows pace of rate cuts The minutes of the Fed’s early-November FOMC meeting, when it slowed the pace of policy loosening with a smaller 25bp cut, tell us little about whether to expect another smaller quarter-point cut at the upcoming policy meeting …
26th November 2024
This page has been updated with additional analysis since first publication. Surprisingly big rebound suggests BoE will leave rates at 4.75% in December October’s surprisingly large rebound in CPI inflation from 1.7% to 2.3% (CE 2.1%, consensus & BoE …
20th November 2024
RBA still in “wait and watch” mode With the RBA maintaining its neutral stance, we’re sticking to our view that the Bank won’t begin cutting rates before Q2 2025. The minutes of the RBA’s November meeting confirmed that the decision to leaves interest …
19th November 2024
This page has been updated with additional analysis since first publication. Resilient labour market heightens risk that policy easing will be delayed With the labour market still on sturdy ground, there is a growing risk to our forecast that the RBA will …
14th November 2024
Fed slows pace of rate cuts As expected, after a run of stronger activity and inflation data since it started its rate cutting cycle with a 50bp reduction in mid-September, the Fed opted for a more modest 25bp cut at the conclusion of its two-day FOMC …
7th November 2024
Watch a recording of our post-MPC online briefing here . Budget means Bank may not cut rates as fast and far While cutting interest rates from 5.00% to 4.75% today, the Bank of England implied that the Budget means rates will continue to fall only …
RBA will cut rates early next year Although the Reserve Bank of Australia maintained a broadly neutral tone at its meeting today, we still think it start to lower interest rates as soon as February next year. The Bank’s decision to leave rates unchanged …
5th November 2024
Bank of Japan will hike rates at December meeting The Bank of Japan retained its hawkish outlook when it kept policy unchanged at today’s meeting and we still expect a rate hike to 0.5% at its next meeting in December. It came as no surprise that the Bank …
31st October 2024
RBA still on course to cut rates in Q1 2025 Today’s CPI release suggests that underlying inflation will be within striking distance of the RBA’s 2-3% target range by year-end. That should pave the way for the Bank to begin easing policy at its meeting …
30th October 2024
50bp cut likely to be followed by another The weak economic backdrop means there is a strong case for the Bank of Canada to follow its larger 50bp cut today, which took the policy rate to 3.75%, with another 50bp move at the next meeting in December. Our …
23rd October 2024
This page has been updated with additional analysis since first publication. Soft inflation data tee up another 50bp cut by the RBNZ The weaker-than-expected Q3 CPI data reinforce our conviction that the RBNZ will loosen policy more aggressively than most …
15th October 2024
Fed split on whether to kick off with 50bp or 25bp rate cut last month The minutes of the mid-September FOMC meeting reveal that support among Fed officials for kicking off the loosening cycle with a bigger 50bp rate cut was a little weaker than the lone …
9th October 2024
