Filtered by Topic: Monetary Policy Use setting Monetary Policy
BoJ won’t provide much help in supporting yen With the yen hitting a 34-year low of just under 152 against the dollar on Wednesday, the Ministry of Finance’s Masato Kanda noted that the government will respond resolutely to “excessive” yen weakness and …
28th March 2024
External position looks secure Balance of payments data released this week show that India’s current account deficit narrowed from US$11.4bn (1.3% of GDP) in Q3 2023 to US$10.5bn (1.2% of GDP) in Q4. Taking a longer perspective of the four quarters to Q4, …
Has Tusk changed the tide in Poland? The 100 day milestone for Poland’s new government is marked today. From an economic perspective, we think there are three key points worth highlighting about how the outlook has and hasn’t changed. First, the release …
22nd March 2024
LGFVs stepping up land purchases Despite the collapse in home sales, construction activity has retreated only modestly in recent years. We think the bulk of the correction has yet to come , with construction activity likely to halve by the end of this …
SARB: will rate cuts ever come? The South African Reserve Bank (SARB) looks set to leave interest rates on hold at 8.25% next week and it now seems an easing cycle won’t begin until after May’s election, the outcome of which could even persuade the SARB …
The Fed wasn’t as hawkish as we had expected this week and, assuming the recent upturn in core inflation proves temporary, there is still a good chance that interest rate cuts will begin in June. Fed content with more gradual inflation fall Despite recent …
The surprise fall in February leaves CPI inflation on track to average 2.8% this quarter, well below the Bank of Canada’s forecast of 3.2%. As the decline in inflation pressures was broad-based, there is a growing likelihood that the Bank of Canada will …
The Bank of England was never going to do anything except keep interest rates at 5.25% this week, but we and the financial markets were surprised that it took further steps in preparing the ground for the first interest rate cut. (See here .) As a result, …
Data released this week broadly support our view that the euro-zone economy will have stagnated in Q1. The Composite PMI rose a touch in March but remained consistent with GDP flatlining. And the ZEW painted a similar picture. Admittedly, we also learned …
Rate cut in August remains plausible At its meeting earlier this week, the RBA dialled down its hawkish bias, with Governor Bullock noting that “the risks to the outlook are finely balanced”. However, her statement may well have been a little premature. …
Run-off in bond holdings will accelerate The Bank of Japan didn’t disappoint at this week’s meeting as the Bank ended negative interest rates, Yield Curve Control and its ETF purchases. Even so, 10-year JGB yields declined and the yen weakened to as low …
Egypt: appreciation for the CBE’s policy shift After the “Super Wednesday” devaluation on 6 th March, the pound has appreciated over the past week or so and it appears as though officials have (so far) stuck to their pledge to let the currency move more …
21st March 2024
A good and bad week for Milei There was renewed optimism about Argentine president Javier Milei’s economic plans earlier this week. The government secured a successful swap of local currency debt (equal to about $50bn), extending the maturity profile of …
15th March 2024
Pressure building in Turkey ahead of the election Pressures on Turkish policymakers are building ahead of the local elections on 31 st March as capital inflows have slowed and FX reserves are falling again. We doubt the central bank will hike interest …
Fed to stress caution amid inflation uncertainty We still expect the Fed to cut interest rates in June, although we don’t expect officials to provide a strong steer either for or against at next week’s FOMC meeting. The updated Summary of Economic …
Nigeria eyes up return to Eurobond market The Nigerian naira’s latest devaluation has taken it closer to fair value and, with investor sentiment towards Nigeria improving, the government is lining up a fresh Eurobond sale. That may help to plug the budget …
January’s GDP figures received the most attention this week, mainly as they suggested the economy may have exited recession. (See here .) But while there was better news on demand, the same cannot be said for the supply-side of the economy. The rise in …
CBC on hold despite booming economy Despite the booming economy, inflation in Taiwan has been falling back in recent months. Accordingly, we expect the central bank (CBC) to leave interest rates unchanged at its meeting on Thursday. GDP growth has …
ECB postpones some big decisions After 15 months of waiting, this week the ECB finally published the outcome of its operational framework review. We set out the key points here . In the near term, the status quo will largely be maintained, with the …
BoJ set to unwind negative rates next week A preliminary tally published by the Japanese Trade Union Confederation (RENGO) today showed that pay hikes in this year’s spring wage negotiations (Shunto) reached 5.28%, up sharply from 3.6% last year and the …
Global outperformance set to continue This week we published our Q2 India Economic Outlook . The key point is that while growth is likely to moderate over the coming quarters, India will remain a global outperformer. We are forecasting GDP growth of 7% in …
Higher inflation a cost to Egypt’s policy shift The fall in the Egyptian pound last week has raised concerns of a fresh surge in inflation, which wasn’t helped by February’s strong reading. However, while we may see another acceleration in March, we think …
14th March 2024
Governor Tiff Macklem dropped a hint this week that the Bank of Canada may be ready to cut rates by June. There was little in the data to dissuade the Bank, with unemployment rising and bankruptcies surging, while a productivity rebound pulled down unit …
8th March 2024
Fed Chair Jerome Powell’s congressional testimony struck a notably less hawkish tone than we have heard recently from some of his colleagues. And with the economic data this week providing little support for the idea of a renewed upturn in inflation, we …
Sheinbaum’s policy platform to hit fiscal realities Claudia Sheinbaum, the frontrunner to become Mexico’s next president, revealed her policy plans over the past week which, as expected, are aimed at building on President López Obrador’s legacy. But her …
June rate cut coming The main event this week was the ECB meeting on Thursday where the key message was that officials are getting closer to easing policy but want to see more evidence that wage growth and underlying inflation are moderating before …
New Productive Forces, old ideas At the top of the premier’s list of Major Tasks for 2024 in his Work Report is a call to develop “New Productive Forces at a faster pace”. NPF is taking a place alongside “common prosperity” in the lexicon of Xi Jinping …
Much ink has been spilled on the Spring Budget this week. For our part, we discussed the macroeconomic and financial market implications in our UK Drop-In and in our UK Economics Focus . The main takeaway is that while the Chancellor was desperate to use …
The raft of policy reforms announced by the Egyptian authorities yesterday, including a devaluation of the pound and new IMF deal, has put the economy on a path out of its current crisis. There have been false dawns before, but we think that momentum is …
7th March 2024
CBN delivers bold hike but inflation risks remain The Nigerian central bank’s 400bp rate hike and its reaffirmation of its inflation fighting credentials should help provide respite to the naira and inflation. But Nigeria will need to shift away from …
1st March 2024
Following the more hawkish speeches from Fed Vice Chair Philip Jefferson and Governor Christopher Waller last week, that tone continued this week – with regional Fed Presidents including New York’s John Williams repeating the suggestion that interest rate …
Reading the NPC tea leaves China’s legislature will kick off its annual gathering on Tuesday. This typically lasts a week or so. But from the perspective of analysts and investors, the key events are on the first day. These include the delivery of the …
Could there be a tax-cutting Budget bombshell? The rumours this week suggest that the Chancellor may have a bit less to play with in the Budget on Wednesday 6 th March than the £15bn we estimated. As a result, he seems to be considering more revenue …
The main data releases in the euro-zone this week will have done little to dispel ECB policymakers’ view that they should wait patiently before making a decision on when to cut interest rates. Economic activity appears to have made a slow start to the …
Third contraction in GDP now likely We doubt that the slump in industrial output in January will prevent the Bank of Japan from ending negative rates over the coming months, but the recent string of disappointing data reinforces our view that this will …
Key takeaways from South Africa’s Budget South Africa’s finance minister recommitted to fiscal restraint in this week’s Budget, but an inability to resist calls greater spending ahead of and after the election is likely to derail these fiscal ambitions, …
23rd February 2024
The encouraging January CPI data mean that the Bank of Canada’s April policy meeting is back in play for a potential interest rate cut, although it still seems more likely that the Bank will wait until June – unless the economic and labour market data …
Fed to delay first rate cut until June Fed to wait until June Based on comments from Fed officials this week, we now expect the Fed to wait until June to begin cutting interest rates. Moreover, when it does begin to loosen policy, we suspect that the Fed …
Venezuela’s inflation plunge In our last Weekly , we flagged Argentina’s inflation problem and the risk that things could get worse before they get better. Data out this week showed that Venezuela may be coming out at the other end of the tunnel. Headline …
Disappointing economic and fiscal forecasts from the OBR haven’t prevented the Chancellor, Jeremy Hunt, from unveiling a splash at previous fiscal events. This time last year, he was handed £14.5bn of headroom against his fiscal mandate to ensure the …
This week saw a raft of data releases as well as the publication of the ECB accounts . We think that there are three key takeaways . First, the broad trend of economic stagnation and disinflation in the euro-zone is continuing. The Composite PMI edged up …
Trouble in Thailand Figures published earlier this week showed that Thailand’s economy contracted by 0.6% in the final quarter of last year. Thailand has experienced by far the slowest recovery from the pandemic in the region – GDP is now just 0.5% …
Majority of MPC in no rush to pivot The minutes of the Reserve Bank’s February policy meeting released this week show the first signs of dissent as MPC member Jayanth Varma argued that a cut to the repo rate would be prudent to show that the committee is …
RBA won't hike rates again Flash PMI data released yesterday showed that Australia’s composite output index jumped to a 10-month high of 51.8 in February. The index is now consistent with annual real GDP growth of about 2.0% in Q1 (see Chart 1), which …
Signs of healthy growth going into the first quarter support our view that the Bank of Canada will probably wait until June to pivot to rate cuts. Signs of positive activity in the first quarter The latest January data has brought signs that growth could …
16th February 2024
Ratings downgrade highlights realities in Israel The decision by Moody’s to deliver Israel’s first credit rating downgrade in its history late last week is a warning sign to policymakers that the strength of the public finances should not be taken for …
The German Economy Minister Robert Habeck admitted this week that the economic situation was “dramatically bad” and said the government would reduce its 2024 growth forecast from 1.3% to 0.2%. The new forecast is a bit lower than the Bundesbank’s latest …
Will the Bank of Korea turn dovish? The BoK looks almost certain to leave interest rates unchanged at its meeting on Thursday. Instead, the focus will be on the tone of the statement. We expect the central bank to start sounding more dovish, as concerns …
Services inflation will slow sharply Australian labour market data published yesterday garnered considerable attention, largely because they showed that the unemployment rate overshot analyst expectations and jumped to a two-year high of 4.1%. However, we …
The strength of the labour market in January is another reason to think that the Bank of Canada can wait a little longer before it starts to cut interest rates. Bank’s latest communications give little away Governor Tiff Macklem gave little away in his …
9th February 2024
