Filtered by Topic: Monetary Policy Use setting Monetary Policy
April meeting is last scheduled before Poloz’s term expires on 2 nd June Bank to provide guidance on duration of asset purchases, may add corporate bonds Set to slash its forecasts in new Monetary Policy Report The Bank of Canada could announce next week …
8th April 2020
Rates slashed to rock bottom and generosity of lending enhanced Massive asset purchases are intended to boost liquidity and will be reduced in time But radical sustained support seems possible, carrying future inflation risks for some What a difference a …
Tensions in interbank and bond market easing Corporate bond spreads remain high but not high enough for RBA to buy private bonds With inflation set to fall short of its target for years to come, negative rates still an option The recent easing in …
2nd April 2020
RBI’s response to coronavirus has so far been limited But outbreak and containment measures should prompt aggressive loosening Repo, reverse repo and cash reserve ratios all likely to be trimmed by 50bp The RBI has so far taken only piecemeal steps in its …
26th March 2020
Big stimulus package from BoE has succeeded so far in easing some financial market stresses But with financial conditions still unusually tight, the Bank may need to do more The Bank may need to test out some new, extreme, tools The decisive action taken …
20th March 2020
Fed to follow last week’s emergency cut with another 50bp reduction next week Fed funds rate likely to return to near-zero bound at April policy meeting Plans to slow pace of balance sheet expansion to be abandoned We expect the Fed to cut interest rates …
11th March 2020
Amid a raft of rate cuts by other G10 central banks, and the recent plunge in oil prices, we have pencilled in a 50bp rate cut at the Norges Bank’s meeting next Thursday. We expect policymakers to follow up with a further 50bp of cuts in Q2, and the krone …
The Bank will cut its forecasts for GDP growth and inflation in light of the virus. On balance, we think it will reduce its deposit rate by 10bp next week. We also expect the Bank to tweak the terms of its longer-term financing operations. The ECB will …
3rd March 2020
Fourth-quarter GDP growth probably in line with Bank’s forecast But possible coronavirus pandemic a key downside risk to the outlook Bank to issue a very dovish statement while keeping policy unchanged The potential for the coronavirus to develop into a …
26th February 2020
Bank remains concerned that cutting rates further will undermine financial stability But coronavirus outbreak set to dampen activity and unemployment will climb further We’ve pencilled in a 25bp cut in April and July The Reserve Bank of Australia remains …
25th February 2020
Central bank action so far focused on crisis management in virus-hit countries. Likely fallout reinforces our existing dovish views on several EMs. But the temporary shock does not yet warrant a response from advanced economies. With the coronavirus …
14th February 2020
Coronavirus will hit the New Zealand economy in the near term. But indicators point to an improvement in economic activity. So we think the RBNZ is done cutting rates. The new coronavirus will inevitably impact the New Zealand economy in the first quarter …
5th February 2020
RBI set to keep rates on hold next week as amid food inflation surge Analyst consensus expects resumption of easing cycle later this year In stark contrast, we expect modest hikes towards the end of 2020 Policy rates look set to be kept on hold at the …
29th January 2020
Falling unemployment allows Bank to keep rates unchanged in February But GDP growth set to fall short of expectations and wage growth still soft More easing will be needed to meet the inflation target The further fall in the unemployment rate in December …
January’s decision whether to cut rates is very close We think that the MPC will keep rates on hold as the economy appears to have turned a corner We expect the next move in interest rates to be up rather than down, albeit not until 2021 January’s …
24th January 2020
Improving data, fading trade and global risks remove need for further rate cuts Policy unlikely to be tightened again for foreseeable future Shelton, Waller nominations a sign of things to come if Trump wins second term Signs of improvement in the …
22nd January 2020
There is no prospect of any change in policy at next week’s meeting… …but we are still forecasting more policy loosening later this year. Details of the scope and timetable of the strategy review may be revealed. At Christine Lagarde’s second meeting as …
16th January 2020
Fourth-quarter GDP probably unchanged – vs Bank’s forecast of 1.3% gain But temporary factors largely to blame and business surveys point to rebound Bank to remain on hold throughout 2020 Next week the Bank of Canada is likely to once again trim its …
15th January 2020
Consumption hasn’t fallen too much after tax hike and labour market remains tight We still expect GDP growth to fall short of expectations this year But lingering capacity shortages will probably convince Bank to remain on hold The Bank of Japan will …
14th January 2020
Impact of sales tax hike was probably worse than Bank had anticipated But external headwinds are fading and the labour market remains very tight The Bank is unlikely to cut interest rates any further The Bank of Japan seems to have underestimated the drag …
16th December 2019
Vlieghe might join Saunders and Haskel in voting for a cut But the election result and prospect of a Brexit deal may mean the majority is content to wait Chances of a rate cut arguably higher in January If the Monetary Policy Committee (MPC) wanted to cut …
13th December 2019
Looser financial conditions & improving economic data mean no further cuts needed Fed will not want to repeat the mistake of raising rates prematurely With inflation set to remain low, Fed is now on prolonged hold The Fed’s less dovish language, against a …
4th December 2019
Further slowdown in growth in Q3 would seal the deal for another rate cut MPC will look past above-target inflation resulting from supply disruptions But in contrast with consensus, we expect modest hikes towards the end of 2020 We agree with financial …
28th November 2019
Economic data have been weak but RBA will wait for Q3 GDP data before cutting Subdued growth and inflation will force the RBA to cut rates to the 0.25% floor in 2020 Governor Lowe set a higher bar for QE but we expect that bar to be reached next year The …
27th November 2019
Some signs that economic weakness is spreading to service sector But Bank will be increasingly concerned by resurgent housing market Unchanged policy now the most likely outcome for the next few quarters The labour market is starting to show cracks and …
26th November 2019
Loose financial conditions make a recession unlikely The risk of a recession occurring within the next year appears to have faded – with the yield curve un-inverting, financial conditions loosening and the incoming economic data still comfortably above …
20th November 2019
While the Fed seems to have pressed pause, we wouldn’t rule out a December cut. Policy will be loosened further in the euro-zone, Australia and several EMs. But the impact will be modest, particularly in advanced economies. Following a wholesale shift …
11th November 2019
Economic data has been in line with RBNZ forecasts… …so we think the Bank will hold for now. But sustained economic weakness means rates will be cut to 0.5% next year. The economic data have been better than the Bank anticipated in their last set of …
6th November 2019
The economy may be on a path that would eventually prompt the MPC to cut rates… …but the chance of a Brexit deal in January will keep the toolbox in the closet for now Unless the headwinds of weak global growth and Brexit uncertainty fade, the next move …
31st October 2019
Despite rebound in house prices, GDP growth set to remain subdued Rising unemployment will push underlying inflation further below 2% We now expect the Bank to cut rates to 0.25% and launch quantitative easing next year Falling unemployment and steady …
30th October 2019
Bank to remain on the side-lines next week But latest surveys point to below-potential GDP growth and lower inflation Markets underestimating the chance of a December rate cut There is little reason to expect the Bank to alter its policy rate next week …
24th October 2019
Outlook for both domestic and external demand has worsened a little But financial stability concerns still stand in the way of interest rate cuts Bank will probably focus its efforts on steepening the yield curve via its bond purchases The economic data …
Officials have not pushed back on expectations for a 25bp cut this meeting Further slowdown in economic growth will prompt one final 25bp cut in December Rates would end up back at zero in a recession, but few signs one is imminent With the markets still …
23rd October 2019
Clashes on Governing Council will cast a shadow over Draghi’s farewell party. No chance of policy action next week, but we think policy will be loosened next year. Forthcoming review to change inflation target and possibly communication strategy. Mario …
17th October 2019
With interest rates near the lower bound, central banks are experimenting with tiers. But they reduce the impact of rate cuts and do little to support banks’ profitability. Such efforts add to signs that monetary policy is near its limits. Recent weeks …
26th September 2019
Another rate cut next week looks a done deal… …but MPC may opt for more traditional 25bp rate cut rather than 35bp In contrast to markets, we expect modest hikes next year The key question ahead of the MPC meeting that concludes on Friday 4 th October is …
Labour market still set to ease further But outlook for GDP growth has improved as house prices have started to rebound Forceful policy response lowers likelihood of unconventional policy being deployed The continued rise in the unemployment rate will …
24th September 2019
Economic activity in Q2 was in line with RBNZ forecasts… …so we think the Bank will hold for now. But sustained economic weakness means rates will be cut to 0.75% by early next year. Following the dramatic 50 basis point cut in August, we suspect the …
19th September 2019
MPC may be a bit less concerned about a no deal Brexit… …but will still hold off on raising rates It seems almost certain that the MPC will keep interest rates at 0.75% at its next meeting on Thursday 19 th September. The minutes may be slightly more …
12th September 2019
GDP growth has held up and the labour market remains extremely tight Leading indicators suggest that the economy has turned for the worse But concerns over financial stability still stand in the way of interest rate cuts There are mounting signs that the …
Fed to deliver widely-expected 25bp cut; data still too strong to justify 50bp We expect a further economic slowdown to prompt a final 25bp cut in December Further significant loosening unlikely in the absence of a recession The Fed looks set for another …
11th September 2019
We think the ECB will cut its deposit rate by 10bp and introduce tiering next week. More QE is probably on the way too, but may not be agreed until October. The Bank is also likely to further strengthen its forward guidance. After policymakers spelt out …
5th September 2019
Healthy Q2 GDP growth and at-target inflation to keep Bank on hold next week Downside risks to the outlook have increased Bank to cut interest rates in October We expect the Bank of Canada to present a more dovish policy statement next week, setting the …
28th August 2019
RBA to leave rates unchanged in September But renewed increase in unemployment should prompt the Bank to cut in November Conditions need to deteriorate much further for RBA to launch QE The Reserve Bank of Australia hasn’t learned much on the state of the …
27th August 2019
Norges Bank to raise rates in September, but this will be the end of the tightening cycle. It is now a question of when, not if, the SNB cuts rates further into negative territory. Expected dovish shift by the Riksbank will ensure that the krona stays the …
8th August 2019
The New Zealand economic outlook remains sour… …And the RBNZ have signalled they are ready to act Rates will be cut in August and again in November The Reserve Bank’s Monetary Policy Committee sounded almost ready to cut rates at its last meeting in June. …
1st August 2019
The RBA will pause in August following back to back rate cuts… …But given the weakness in the economy, the RBA will cut rates to 0.5% by early 2020 Lowe may be venturing into the world of forward guidance We expect the Reserve Bank of Australia to take a …
31st July 2019
Inflation remains below target, while most hawkish MPC member has stepped down As such, another rate cut is likely next week But aggressive policy easing risks stoking inflation over longer term The MPC – now even more firmly under the control of doves …
Beware of a misleading hawkish signal Key message is that the MPC has become less hawkish, but not as dovish as the markets Far more interesting than the probable decision by the Monetary Policy Committee (MPC) to leave interest rates at 0.75% on Thursday …
25th July 2019
Fed likely to cut rates by 25bp next week, rather than 50bp Economy not yet weak enough to justify additional easing But we expect slowing growth to prompt further cuts in December and March next year The Fed is likely to cut interest rates by 25bp next …
24th July 2019
