Filtered by Topic: Monetary Policy Use setting Monetary Policy
Hot CPI print will give the RBA pause for thought With underlying price pressures proving somewhat persistent, we're sticking to our view that the RBA won't cut rates as far as markets are anticipating. According to the monthly CPI indicator, headline …
28th May 2025
Easing inflation increases chances of a hold at Copom’s June meeting The fall in Brazil’s headline inflation rate to 5.4% y/y in the first half of May means that the risks to our forecast for a final hike in June are skewed to the downside. But if the Q1 …
27th May 2025
Easing cycle to remain on pause, but tariff risks grow larger The Hungarian central bank (MNB) left its base rate on hold again today, at 6.50%, and we think it is likely that above-target inflation will prevent interest rate cuts being delivered this …
Regional growth resilient (for now) despite tariffs The European Commission's Economic Sentiment Indicators for Central and Eastern Europe (CEE) suggest that pockets of the region are starting to feel the bite from US tariffs, but that overall regional …
Economy weak, inflation expectations eased May’s euro-zone business and consumer survey from the European Commission shows a small improvement in sentiment, but the data are still consistent with the economy struggling. And the price expectations indices …
BoI leaves rates on hold, timeline for easing slipping back The Bank of Israel (BoI) left its policy rate unchanged as expected at 4.50% again today, but the accompanying communications took a slightly more hawkish tone on inflation. We think the easing …
26th May 2025
CBE delivers smaller cut as disinflation (temporarily) stalls The Central Bank of Egypt (CBE) cut its overnight deposit rate by a smaller-than-expected 100bp today, to 24.00%. But as inflation continues to ease over the coming months, we still think …
22nd May 2025
Banxico looks set for another cut despite rise in inflation The larger-than-expected rise in Mexico’s headline inflation rate in the first half of May, to 4.2% y/y, was driven in large part by non-core components and is unlikely to sway Banxico’s …
Inflation stays low, but inflation target change may keep SARB on hold The rise in South Africa’s headline inflation to 2.8% y/y still left it below the lower bound of the Reserve Bank’s 3-6% target range and, ordinarily, would make us more confident that …
21st May 2025
Easing cycle to be gradual Bank Indonesia today cut interest rates by 25bps for the first time since January, and we expect further easing over the coming months. Today’s decision to cut the policy rate from 5.75% to 5.50% was predicted by 20 out of the …
Rates on hold with CBN in wait-and-see mode The Central Bank of Nigeria left its policy rate on hold at 27.50% today and, with the disinflation progressing slowly and concerns that low oil prices will put downward pressure on the naira, it looks like it …
20th May 2025
RBA cuts by 25bp, leaves the door open for further easing With the Bank growing increasingly concerned about downside risks to the economy, there is a good chance that it will cut rates further than we are currently anticipating this cycle. The RBA’s …
PBOC’s easing will confer only marginal benefits Today’s reductions to both the one-year and five-year Loan Prime Rates (LPR) probably won’t be the last this year. But rate cuts are likely to remain modest as the PBOC appears to think they could hinder …
Risks now skewed towards hikes rather than further cuts The National Bank of Romania (NBR) highlighted concerns with the uncertain political backdrop and recent pressure on the currency when leaving its policy rate on hold today, at 6.50%. We now think …
16th May 2025
Growth concerns leave the door open for another 50bp cut in June Mexico’s central bank (Banxico) lowered its policy rate by another 50bp, to 8.50%, at today’s meeting and the accompanying communications underlined that policymakers’ concerns have shifted …
15th May 2025
This page has been updated with additional analysis since first publication. Sticky wage growth will mean the Bank of England remains cautious The jobs market weakened further in the face of April’s rise in payroll taxes and the national minimum wage. But …
13th May 2025
Inflation rises, but Banxico still on course for a 50bp cut next week Mexico’s headline inflation rate edged up to 3.9% y/y in April, but we think that the challenging growth outlook and the relative resilience in the peso leave the door open for another …
8th May 2025
For an updated and more detailed version of this analysis, click here . More rate cuts coming, but not as quickly as the markets expect While cutting interest rates from 4.50% to 4.25% today, the Bank of England poured some cold water on the markets’ …
Riksbank leave rates unchanged, but signals cuts may be coming While the Riksbank left its policy rate unchanged at 2.25% today, policymakers indicated that a rate cut is likely this year given the weakness of the economy. We now think that they are …
Rates on hold (again), but rate cuts are coming Bank Negara Malaysia (BNM) today left its main policy rate unchanged at 3.0%, but sounded more downbeat on the economic outlook, suggesting scope for rate cuts later in the year. The decision was correctly …
Copom hikes again, but tightening cycle near an end (if not already over) Brazil’s central bank hiked the Selic rate by a further 50bp, to 14.75%, today and officials made clear in the accompanying statement that the tightening cycle is near an end. We …
7th May 2025
Fed offers no hint that a rate cut is coming any time soon The minimalist statement issued by the Fed at the conclusion of the FOMC meeting gave no hint that it was considering a further cut to the fed funds rate, at least not any time soon. As was almost …
NBP cuts by 50bp ... but easing cycle may be more limited than most expect The decision by the National Bank of Poland (NBP) to cut its policy rate by 50bp today, to 5.25%, rather than opt for a smaller 25bp cut, suggests a slightly more dovish balance on …
CNB cuts by 25bp, but easing cycle may now be over The Czech National Bank (CNB) cut its policy rate by 25bp today, to 3.50%, but we think that this may mark the end of its easing cycle. Our forecast for the policy rate to remain on hold at 3.50% over the …
Easter-driven rise in services inflation won’t concern ECB April’s rise in services inflation is unlikely to worry the ECB too much as it was probably driven mainly by Easter timing effects. We think services inflation will start falling again in the …
2nd May 2025
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
This Rapid Response has been amended from our original response to correct the food CPI figure. Fall in inflation paves the way for May rate cut The larger-than-expected fall in Polish inflation, to 4.2% y/y, in April, is probably enough to tip the …
30th April 2025
Dovish BoT and rising downside risks prompts forecast change Thailand’s central bank (BoT) today cut interest rates by a further 25bps (to 1.75%) and the poor prospects for the economy mean more easing is likely soon. The decision was correctly …
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 …
MNB to stay on hold as above-target inflation persists The Hungarian central bank (MNB) left its base rate on hold today, at 6.50%, and despite downside risks to activity from US tariffs, we think its easing cycle will remain on pause throughout 2025. …
29th April 2025
This publication has been updated with additional analysis ESI points to small hit from tariffs in April The ESI for April point to a small hit to the euro-zone from US tariffs in April and suggest that growth remained quite weak. With the drag from …
Sentiment holds up well in the face of Trump’s tariffs The European Commission's Economic Sentiment Indicators for Central and Eastern Europe (CEE) provide a tentative sign that the impact of US tariffs on the region has been fairly contained so far. The …
Inflation rises but end of tightening cycle is near The further rise in Brazil’s headline inflation rate to 5.5% y/y in the first half of April means that Copom will press ahead with a 50bp hike in the Selic rate at its next meeting in early May. But …
25th April 2025
CBR drops tightening bias, rate cuts likely in Q3 The Central Bank of Russia (CBR) left its policy rate on hold at 21.00% again today and dropped the language in its statement that further interest rate hikes are possible. With inflation nearing a peak, …
Leadership signals policy flexibility in the face of trade uncertainty The Politburo has just concluded its April meeting which, as usual, focused on economic affairs. The communique signalled that monetary policy easing is still on its way and that …
Inflation rises, but Banxico more focussed on weak economy The rise in Mexico’s headline inflation rate in the first half of April, to 4.0% y/y, is unlikely to shift Banxico’s focus away from the weakness of the economy and we expect it to deliver another …
24th April 2025
Rates on hold amid currency concerns, BI in no rush to cut The decision by Bank Indonesia to leave interest rates unchanged at 5.75% came as little surprise and was correctly predicted by 24 out of the 26 analysts polled by Reuters, including ourselves. …
23rd April 2025
Odds of a May rate cut shorten The weaker-than-expected Polish industrial production and wage data for March have increased the probability that the central bank (NBP) will restart its easing cycle at its next meeting in May, but that decision will still …
22nd April 2025
ECB acknowledges downside risks from trade uncertainty While the ECB’s decision to cut its deposit rate from 2.5% to 2.25% today was expected, the monetary policy statement clearly points to further policy easing to come. The statement says the outlook …
17th April 2025
CBRT signals tight policy here to stay The decision by the Turkish central bank (CBRT) to hike its one-week repo rate by 350bp, to 46.00%, formalises the emergency monetary tightening delivered last month and is a strong signal of commitment to a tight …
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 …
Interest rates on hold, but BoK to resume easing cycle soon The Bank of Korea today left its main policy rate unchanged at 2.75%, but we think this represents a pause not an end to the easing cycle. The decision was correctly predicted by 24 out of 37 …
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
Singapore’s central bank loosened monetary policy again today and with inflation set to remain low and the economy weak, further easing looks likely in the coming quarters. The MAS conducts monetary policy by targeting the nominal effective exchange rate …
14th April 2025
Inflation rises again, Copom to deliver a bit more tightening The jump in Brazil’s headline inflation rate to 5.5% y/y in March looks set to be followed by further increases towards 6% y/y over the coming months. Copom will almost certainly deliver a bit …
11th April 2025
Inflation picks up, but loosening cycle still set to begin next week Egypt’s headline inflation rate increased to 13.6% y/y in March, but we still expect policymakers at the Central Bank of Egypt (CBE) to deliver the first interest rate cut in nearly five …
10th April 2025
Low inflation and tariff uncertainty supports case for further monetary easing The central bank in the Philippines (BSP) resumed its easing cycle today by lowering its policy rate by 25bp (to 5.50%) and in its communications highlighted the threat to …
RBI’s easing cycle will run further than most expect The Reserve Bank of India’s (RBI’s) decision to cut the repo rate by another 25bps today to 6.00% comes as no surprise given the recent sharp drop in inflation and the headwinds from US tariffs. But the …
9th 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 …
