Filtered by Topic: Monetary Policy Use setting Monetary Policy
No signs of stress in financial markets and policy already extremely loose Bank has already started to address side effects of aggressive easing Upcoming review still shrouded in mystery The Bank of Japan is unlikely to respond to the worsening virus …
14th January 2021
Speculation that Bank could cut interest rates looks overdone. Bank set to upgrade its GDP forecasts. Macklem faces communications challenge as Bank attempts to keep yields low. The Bank of Canada is set to upgrade its growth forecasts next week, despite …
13th January 2021
Vaccines mean the recovery may not need a further monetary boost But monetary policy will remain extremely loose for years yet And a no deal Brexit could yet prompt further easing The next Monetary Policy Committee (MPC) meeting on Thursday 17 th December …
10th December 2020
Recovery has surprised to the upside but third wave is a downside risk Bank to extend emergency lending facility New facility to support regional banks highlights discomfort with negative rates With the ongoing wave of infections in Japan the most severe …
Officials unconvinced of need for, or benefits of, further stimulus But guidance on asset purchases is set to be updated Strength of rebound in inflation next year could catch the Fed off-guard We expect the Fed to keep its main policy settings unchanged …
9th December 2020
The Bank will play down the chances of a quick return to economic health. We expect it extend the PEPP until at least mid-2022 and announce more TLTROs. But the Governing Council will probably leave the deposit rate unchanged. Policymakers at the ECB have …
3rd December 2020
Central banks keen to bridge a difficult period before vaccines are rolled out… … and reduced fiscal stimulus shifts onus of supporting recovery to monetary policy The legacy of the virus will warrant rock bottom interest rates for several years The …
25th November 2020
Vaccine may be available by Q2 2020, allowing full reopening of the economy Labour market doing much better than Bank had anticipated Case for additional stimulus is diminishing The Reserve Bank of Australia won’t make any policy changes at its meeting on …
24th November 2020
The Riksbank is likely to leave its repo rate on hold at zero next Thursday (26 th November). But with the economy heading south, and the ECB gearing up to ease again, we think there is a good chance that policymakers will take the opportunity to expand …
19th November 2020
Economic data have been mixed but generally support further easing RBNZ to launch lending programme to lower funding costs RBNZ to cut OCR to -0.25% in April and hold rates steady thereafter At its meeting on 11 th November, the Bank will likely unveil a …
5th November 2020
The Norges Bank will almost certainly leave its key interest rate on hold at zero next Thursday and will probably reiterate that it is in no rush to hike. However, given the backdrop of rising house prices, we think that policymakers will start to …
29th October 2020
Consensus comes round to our view that MPC will expand QE by £100bn in November This won’t be the last QE expansion Negative rates are possible, but probably not for another 6-12 months Back in June, we were pretty much alone in forecasting that the MPC …
28th October 2020
Cash rate target, three-yield target and TFF interest rate to be lowered to 0.10% Interest rate on Exchange Settlement balances to remain at 0.10% Quantitative easing is coming and the Bank may buy $150bn in government bonds The Reserve Bank of Australia …
Bank set to lower GDP growth and inflation forecasts slightly Expansion in BoJ’s assets already very large by international comparison Bank is unlikely to announce additional easing The Bank of Japan may revise down its GDP growth and inflation forecasts …
21st October 2020
Bank coming round to our view that wage growth and inflation will remain soft Cash rate target, three-yield target and TFF interest rate to be lowered to 0.10% Additional bond purchases to lower long-term yields also on the cards The Reserve Bank of …
29th September 2020
Elevated inflation will keep new-look MPC on the side-lines next week But dire economic outlook means it will resume loosening cycle soon Markets expect no change for prolonged period We agree with market and analyst expectations that the Reserve Bank’s …
23rd September 2020
RBNZ pushing QE to its limits Second wave delays the economic recovery The RBNZ set to launch negative rates next year The RBNZ is reaching the limits of its asset purchase program. We therefore doubt the Bank will make any significant policy changes at …
17th September 2020
After a tweak-laden last policy meeting, the Riksbank is likely to maintain the status quo next Tuesday (22 nd September). While there is no burning platform for policy change, we think that the next move in interest rates will eventually be down. Recall …
15th September 2020
Downside risks to the Bank of England’s forecasts are crystallising MPC will wait until the current QE program is ending before adding more stimulus QE still the tool of choice, negative rates possible further ahead The initial recovery has been …
10th September 2020
Bank will stay the course at upcoming meeting Likely future PM Suga has indicated that he sees scope for interest rate cuts But recent comments suggest he won’t interfere in monetary policy decisions The Bank of Japan will leave policy settings unchanged …
9th September 2020
No major policy changes on the cards at next week’s Governing Council meeting. Recent developments mean that the ECB will stick firmly to its dovish course. We think the Bank will eventually add to its planned emergency asset purchases. The ECB will not …
3rd September 2020
Draconian lockdown in Victoria to weigh on recovery and lift unemployment Inflation and wage growth set to soften further We still expect the Bank to start buying-longer dated bonds early next year The Reserve Bank of Australia isn’t keen on providing …
25th August 2020
The Norges Bank will almost certainly leave its key interest rate on hold at zero next Thursday (20 th August), and we expect it to reiterate that it is in no rush to tighten policy. Having cut its key policy interest rate to a record low of zero at its …
13th August 2020
RBNZ on track to meet its QE targets New Zealand economy broadly recovered The RBNZ will hold off until 2021 to launch negative rates to combat weak inflation The RBNZ has stabilised the pace of asset purchases in recent months and is on track to meet its …
5th August 2020
The MPC is unlikely to expand QE before November But it may signal that further stimulus will be needed at some point It could revise down the effective lower bound, leaving the door open to negative rates We expect the Monetary Policy Committee (MPC) to …
30th July 2020
Initial bounce-back in activity has been stronger than expected But renewed lockdown in Melbourne is weighing on recovery and inflation is slumping We still expect a resumption in asset purchases before long The renewed lockdown in Melbourne is set to …
29th July 2020
Signs that recovery is stalling should prompt further easing Aware of inflation risks, a smaller 25bp policy rate cut is likely next week But persistent economic weakness means loosening cycle won’t end there The Reserve Bank of India (RBI) has been …
28th July 2020
Bank unlikely to announce any major policy changes. May present only partial set of forecasts in its new Monetary Policy Report. Little need for yield curve control at this stage. As the latest high-frequency data and surveys look encouraging, and policy …
8th July 2020
Lending schemes still well below ceilings and appetite for bank lending has declined Strains in foreign currency funding markets subsiding Concerns about financial stability will prevent rate cuts The Bank of Japan is likely to leave policy settings …
Uptake of central bank lending facilities has been mixed But lending is reaching firms, either through governments or central banks… … and central bank backstops are offering important reassurance to investors This month has seen a further shift among the …
2nd July 2020
Activity and labour market exceeding Bank’s expectations But unemployment set to remain far above pre-virus levels, weighing on wage growth Bank may resume bond purchases at some point, perhaps early next year Given that the economy has coped better with …
30th June 2020
While we still expect the Riksbank to cut its repo rate back into negative territory later this year, it is set to keep its powder dry at its policy announcement next Wednesday (1 st July). Recall that the Riksbank left its repo rate unchanged at zero …
24th June 2020
RBNZ beginning to slow the pace of QE New Zealand economy recovering solidly The RBNZ will hold off until 2021 to launch negative rates to address low inflation The RBNZ has started to reduce the pace of asset purchases as economic activity has recovered. …
18th June 2020
The Swiss National Bank and the Norges Bank are all but certain to leave their policy settings unchanged at the scheduled announcements next Thursday (18 th June) and for the foreseeable future. Recall that the SNB left interest rates on hold at -0.75% at …
11th June 2020
MPC likely to announce another £100bn of QE in June… …and that won’t be the last expansion Negative interest rates possible, but far from guaranteed The Bank of England has much more work to do. It will probably start by announcing £100bn more …
Existing lending schemes still well below ceilings But latest supplementary budget foresees additional subsidised lending Bank to secure funding for commercial lenders by further increase in lending schemes The Bank of Japan has already done a lot to …
9th June 2020
Low yields mean there is no rush to adopt yield curve control FOMC could make an impact just by publishing interest rate projections again Fed slow to roll out its 13( 3 ) emergency lending facilities The Fed has several different policy options for …
3rd June 2020
The ECB is likely to increase the PEPP by a minimum of €500bn next week. Policymakers may also say the PEPP will run until at least mid-2021. We no longer anticipate a further reduction in the deposit rate. Policymakers have signalled their intention to …
28th May 2020
First meeting for new governor Tiff Macklem. Some positive signs since last meeting, but some worrying ones as well. Downside risks raise the case for more policy support. We expect the Bank of Canada to announce additional corporate bond purchases next …
27th May 2020
Previous government bond purchases were focused on restoring liquidity Unemployment is rising and inflation set to slump Bank may launch fresh round of purchases focused on lowering long-term rates We suspect that the Reserve Bank of Australia will keep …
26th May 2020
Numerous lending facilities have been either launched, revived, or expanded Many aim to provide liquidity to financial institutions and non-financial firms But the line between liquidity operations and monetary policy is sometimes blurred Traditionally, …
7th May 2020
The lockdown hit the New Zealand economy hard RBNZ is supporting the economy with QE and other measures but more is needed The RBNZ will cut the OCR into negative territory, perhaps in August The RBNZ will want to wait to assess the impact of the virus …
6th May 2020
Given the toxic combination of Covid-related disruption and precipitous plunge in oil prices, we think that the Norges Bank’s easing cycle has further to run. Whereas financial markets are pricing in only a small chance of further loosening, we have …
1st May 2020
MPC to signal it continues to stand behind gilt market There’s a chance it could extend QE But that’s probably more likely to happen in the coming months The Monetary Policy Committee (MPC) will probably use its policy announcement on Thursday 7 th May to …
30th April 2020
Bank has started to roll back liquidity provision and bond purchases as tensions ease Unemployment set to remain above levels consistent with full employment for years Interest rates will have to remain low for longer than markets anticipate The continued …
28th April 2020
The €750bn Pandemic Emergency Purchase Programme now looks too small. The less EU leaders achieve, the more the ECB will have to do. Further increase in bond purchases very likely, perhaps with explicit yield cap. The ECB has ramped up its asset purchases …
23rd April 2020
Having pulled out all the stops since its last scheduled policy meeting, in February, we suspect that the Riksbank will take stock next week. However, as the focus shifts away from monetary firefighting, we think that the Bank will return to negative …
Fed funds target range will be stuck at zero for foreseeable future Easing financial market stress suggests Treasury purchases will continue to slow But new lending facilities could eventually push balance sheet above $10trn With the Fed having already …
22nd April 2020
Funding strains not severe so major expansion in asset purchases not on the cards But looming slump in activity will derail efforts to reach 2% inflation Bank may also cut policy rate from -0.1% to -0.2% The Bank of Japan will probably take some …
