Filtered by Topic: Monetary Policy Use setting Monetary Policy
Soft inflation keeps rate cut in play The weaker-than-expected South African inflation figure for February, of 3.2% y/y, keeps the door open for the Reserve Bank to lower the repo rate by 25bp (to 7.25%) at its meeting tomorrow. The outturn was unchanged …
19th March 2025
Rates on hold, but further easing likely later in the year Bank Indonesia today left its main policy rate unchanged (at 5.75%) but hinted that further easing was likely later in the year. We are maintaining our view that the central bank will cut rates …
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 …
Growth in Chile’s economy slowed to 0.4% q/q in Q4, but more timely monthly activity data suggest that the economy headed into 2025 with more momentum. This, combined with above-target inflation, means that the central bank is likely to stand pat at its …
18th March 2025
NBP on hold, talk of rate cuts in H2 may be premature The decision by the National Bank of Poland (NBP) to leave its policy rate on hold today, at 5.75%, was widely anticipated, but we think that interest rates will stay higher than most others expect …
12th March 2025
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 …
Inflation jump keeps door open for more rate hikes The sharp rise in Brazilian inflation to 5.1% y/y in February is likely to be followed by further increases in the coming months. Our base case is that next week’s Copom meeting will see the final (100bp) …
Inflation plunges, opening the door for first rate cut Egypt’s headline inflation rate slowed sharply from 24.0% y/y in January to a near three-year low of 12.8% y/y in February, which should pave the way for the Central Bank of Egypt (CBE) to start its …
10th March 2025
Another 50bp cut on the cards The rise in Mexico’s headline inflation rate, to 3.8% y/y in February was entirely driven by non-core inflation and therefore won’t be a major concern for the central bank. Indeed, we think that the weakness in the economy …
7th March 2025
Period of unanimous support for rate cuts is over The ECB’s decision to cut its deposit rate from 2.75% to 2.50% today came alongside new language which shows that policymakers are becoming less certain about the future path of interest rates. Looser …
6th March 2025
CBRT cuts again, easing cycle has further to run The communications accompanying the decision by the Turkish central bank (CBRT) to cut its policy rate by 250bp again today, to 42.50%, suggest that policymakers were reassured by the fall in inflation in …
Rates on hold (again), no change likely this year Bank Negara Malaysia (BNM) today left its main policy rate unchanged at 3.0%, and once again made clear that it was in no rush to adjust its monetary policy settings anytime soon. The decision comes as no …
Little prospect of a reflationary rebound Chinese policymakers have stuck with an ambitious target for real GDP growth but have become more cautious on the outlook for nominal growth and inflation. And while they did deliver some increase in fiscal …
5th 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
250bp rate cut this week on the cards The weaker-than-expected Turkish inflation figure for February, of 2.3% m/m, will provide some reassurance that the spike in January was a one-off. And it keeps the door open for the central bank to lower the one-week …
3rd March 2025
Softer price pressures pave the way for further rate cuts The smaller-than-expected increase in South Africa’s headline inflation rate, to 3.2% y/y, supports our view that the Reserve Bank can press ahead with its easing cycle over the coming months. The …
26th February 2025
BoT to cut rates further over the coming year Thailand’s central bank (BoT) today cut interest rates by a further 25bps (to 2.00%), and we think more easing is likely before the end of the year. Today’s decision was predicted by just 10 out of the 26 …
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 …
MNB on hold ... and probably for some time The Hungarian central bank (MNB) left its base rate on hold again today, at 6.50%, and we think that its easing cycle will remain on pause throughout 2025. That’s a more hawkish view than the latest consensus …
25th February 2025
Inflation jumps, Copom to deliver more tightening The jump in Brazil’s headline inflation rate to 5.0% y/y in the first half of February means Copom will almost certainly press ahead with another 100bp hike in the Selic rate to, 14.25%, at its March …
Further interest rate cuts coming The Bank of Korea cut interest rates today by 25bps (to 2.75%) – the third cut in the past four meetings. The move was predicted by 35 out of 36 analysts polled by Reuters, including ourselves. The central bank will …
BoI leaves rates on hold, but getting closer to easing The communications accompanying the decision by the Bank of Israel (BoI) to leave its policy rate on hold again today, at 4.50%, were slightly less hawkish than at the previous meeting, and support …
24th February 2025
Odds shifting in favour of another 50bp cut The fall in core inflation in Mexico in the first half of February combined with weak economic activity, means that Banxico is likely to press ahead with another 50bp cut at its meeting next month. The outturn …
Polish economy starts 2025 on the front foot The stronger-than-expected activity data out of Poland for January suggest the economy has carried over some of the positive momentum from the end of last year. Alongside the recent strength of inflation, this …
CBE stands pat, but easing around the corner The Central Bank of Egypt (CBE) left its overnight deposit rate unchanged at 27.25% today but, with inflation set to slow sharply over the next couple of months, we think policymakers will start the monetary …
20th February 2025
Rates on hold, CBN to turn to easing soon The Central Bank of Nigeria confirmed today that its tightening cycle was at an end by leaving the policy rate at 27.50% today, and we think its attention will quickly turn to rate cuts, probably beginning in May …
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
Rates on hold, but further easing likely later in the year Bank Indonesia today left its main policy rate unchanged (at 5.75%) but hinted that further easing was likely later in the year. We are maintaining our view the central bank will cut rates …
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
NBR leaves rates on hold, scope for cuts looking increasingly limited The National Bank of Romania (NBR) left its policy rate on hold again today, at 6.50%, and we think there is limited scope for interest rate cuts this year. Our forecast for the policy …
14th February 2025
CBR leaves rates on hold, loosening still some way off The decision by the Central Bank of Russia (CBR) to leave interest rates on hold at 21.00% today was widely expected, and the hawkish communications suggest that policymakers are not going to bend to …
BSP to resume easing cycle soon In a surprise move the central bank in the Philippines (BSP) left its policy rate on hold at 5.75% today, but we think this represents a pause, rather than a halt to the easing cycle. The announcement was predicted by just …
13th 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
Fall in inflation won’t stop Copom from hiking again in March The fall in Brazil’s headline inflation rate in January, to 4.6% y/y, was mainly due a drop in housing inflation and is unlikely to prevent the central bank from delivering another 100bp hike …
Inflation nudges lower as first rate cut edges closer Egypt’s headline inflation rate only slowed a touch to 24.0% y/y in January. But with earlier falls in the pound now starting to fall out of the annual price comparison, we expect Egypt’s headline …
10th February 2025
New governor kicks off easing cycle The Reserve Bank of India’s (RBI’s) decision to cut the repo rate by 25bps today to 6.25% confirms that, under new leadership, its priorities have tilted from containing inflation to providing more support for the …
7th February 2025
Banxico steps up easing as it adopts a more dovish tone Mexico’s central bank stepped up the pace of monetary easing to 50bp at today’s meeting, lowering the policy rate to 9.50%, and the overall communications were dovish. While a tariff-induced drop in …
6th February 2025
Easing cycle resumes, rates on their way to neutral The Czech National Bank (CNB) cut its policy rate by 25bp today, to 3.75%, and we think that further easing lies in store this year. Our forecast for the policy rate to fall to 3.00% by end-2025 would …
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 …
NBP a long way from resuming its easing cycle The National Bank of Poland (NBP) left its policy rate on hold again today, at 5.75%, and we think that interest rates will remain on hold throughout 2025. That’s a more hawkish forecast than the consensus …
5th February 2025
Still on course for another large rate cut The sharp jump in the m/m rate of Turkish inflation, to 5.0%, was largely driven by one-off factors. And so long as the February CPI figures come in much softer (as we expect), we still think it’s most likely …
3rd February 2025
ECB has much further to go The ECB’s decision to cut its deposit rate from 3% to 2.75% today came as no surprise and the accompanying statement implies that more cuts are coming, as is widely anticipated. We think the Bank will have to lower interest …
30th January 2025
Copom sticks to its promise Brazil’s central bank delivered on its pledge to deliver another 100bp hike to the Selic rate, to 13.25%, and another 100bp increase at March’s Copom meeting is all but certain. For now, we are sticking with our view that that …
29th January 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 …
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 …
This page has been updated with additional analysis Riksbank makes final rate cut of the cycle We think that the Riksbank will keep its policy rate at 2.25% for the foreseeable future after delivering a 25bp cut today. While there is a lot of uncertainty, …
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 …
