Filtered by Topic: Monetary Policy Use setting Monetary Policy
Last week’s surprise change in the Fed’s guidance about how soon it is likely to raise its key policy rate raises the question of whether the ECB will follow suit. In our view, although the euro-zone faces similar inflationary pressures in the coming …
23rd June 2021
The Bank of Thailand (BoT) today left interest rates unchanged at their all-time low of just 0.5%, dovish comments from the press conference support our view that rates will be on hold for a long time to come. Interest rates have now been left unchanged …
We now expect the unemployment rate to approach 4% by late-2022. Even though the reopening of the border should ameliorate staff shortages a bit next year, we expect wage growth to accelerate markedly. As such, we’re bringing forward our forecast for the …
Hungary’s central bank (MNB) raised interest rates by 30bp today and with inflation set to remain above the MNB’s 4% upper tolerance level well into 2022, we expect an additional 60bp of tightening at the next three Inflation Report meetings. This would …
22nd June 2021
While policymakers in Hungary and Czechia look set to lift interest rates from their pandemic lows later this week, we doubt that Poland’s central bank will follow suit this year. That said, with inflation in Poland set to be higher than we had previously …
21st June 2021
Commercial banks left the Loan Prime Rate (LPR) on hold again today. The PBOC has now fully reversed last year’s credit acceleration using quantitative controls. Accordingly, policy rate hikes that could prompt LPR increases are unlikely in the near …
The yields of 10-year US Treasuries and German Bunds have moved in lockstep since the latest Fed meeting, but we doubt that this will continue. While we expect the Treasury yield to rise sharply between now and the end of 2022, we think that the Bund …
18th June 2021
Wednesday’s hawkish surprise from the Fed adds weight to our views that i) the US stock market will see only limited gains between now and the end of 2023, even as the economy generally continues to power ahead and ii) the stock market ‘rotation trade’ …
The Central Bank of Egypt (CBE) announced it kept interest rates on hold on Thursday evening and, with inflationary pressures building, the CBE is likely to refrain from cutting rates in the near term. Even so, very high real interest rates and the …
While the Bank of Japan kept its major policy settings unchanged today and will continue to do so for the foreseeable future, it extended the deadline for applications to its emergency lending facility from end-September 2021 to end-March 2022. And it …
The statement accompanying today’s decision by the Turkish central bank (CBRT) to leave its policy rate at 19.00% suggests that policymakers are (for now) standing up to political pressure to lower interest rates. But we still think that an easing cycle …
17th June 2021
Taiwan’s central bank (CBC) left interest rates unchanged today at 1.125% despite the booming economy. With inflation relatively subdued and the currency at multi-year highs against the US dollar, we suspect the CBC will be in little hurry to start …
While the Norges Bank left its policy rate on hold at a record low of zero once again this morning, it all but confirmed that it will raise rates in September – which would be well ahead of the RBNZ and the Fed, for example. We expect the NOK to gain …
While the Norges Bank will start hiking in Q3, and we now expect the Fed to raise rates twice in 2023, developments in Frankfurt will continue to set the tone at the Swiss National Bank. Having left the policy rate on hold at -0.75% again this morning, …
The hawkish statement from the Brazilian central bank meeting (at which the Selic rate was raised by 75bp to 4.25%) indicates that policymakers are more confident in the economic recovery but also more worried about energy inflation than we had …
Bank Indonesia (BI) left its policy rate unchanged at 3.5% today and signalled that it was in no rush to adjust its monetary policy settings again this year. We expect rates to remain low to support the recovery for some considerable time. The decision …
We expect the RBNZ to impose new lending restrictions in the months ahead which, in addition to rising interest rates, should result in house prices declining next year. The median house price in New Zealand was up 32.3% y/y in May. Part of that was due …
The broad-based rise in inflation across EMs this year has elicited varying degrees of policy responses from central banks. Those facing above-target inflation and most worried about credibility (Brazil, Russia) have already started hiking rates and will …
16th June 2021
A rate hike by the Norges Bank in September would make it the first G10 central bank to start to raise interest rates after the pandemic, by a comfortable margin. As a result, the NOK is likely to gain ground on the euro and the SEK by the end of the …
15th June 2021
The RBNZ’s hawkish rate outlook has prompted us to bring forward our forecast for the first RBNZ rate hike from November to May next year. But in contrast to the RBNZ, we don’t think the pandemic will cause lasting damage to the labour market so we’ve …
14th June 2021
Russia’s central bank (CBR) raised its policy rate by another 50bp, to 5.50%, at today’s meeting and the accompanying communications delivered a much more hawkish tone about inflation risks and the need to raise interest rates further. With inflation set …
11th June 2021
Having left the pace of its PEPP purchases unchanged and made big upgrades to its GDP forecasts, we think the ECB will start to taper the PEPP later this year. But we think it will eventually make an offsetting increase to other asset purchases and will …
10th June 2021
The Bank did not provide any new hints about the direction of policy in its statement today but, with GDP likely to start growing strongly again this month as the coronavirus restrictions are lifted, we expect the Bank to cut the weekly pace of its asset …
9th June 2021
We now expect the RBA to refrain from announcing a target for the overall amount of bond purchases at the July meeting while keeping the weekly pace of purchases unchanged at $5bn . A more flexible approach to bond-buying would make it easier for the Bank …
8th June 2021
The Reserve Bank kept the repo rate on hold at a record low today and announced plans to ramp up government bond purchases on the secondary market, underlining its commitment to supporting the recovery. With the economy likely to take time getting back to …
4th June 2021
The Reserve Bank of Australia still sounded dovish when it kept policy settings unchanged today. We think it will expand its bond purchase program by another $100bn next month. The RBA’s decision to keep interest rates and the parameters of its bond …
1st June 2021
The Norges Bank has a history of beginning to tighten policy earlier than the ECB and we think it will follow that pattern again this year. Meanwhile, although it’s not the most likely scenario, we think that financial markets are under-estimating the …
27th May 2021
The Bank of Korea (BoK) left its main policy rate on hold at 0.50% today and given that the recovery still has a way to go, the BoK is likely to leave policy accommodative for at least the next few quarters. But concerns about financial stability are …
The Reserve Bank of New Zealand sounded more optimistic at today’s meeting and signalled that it will start to hike rates in the second half of next year, in line with our long-standing forecast. If anything, the risks are that the Bank tightens policy …
26th May 2021
Policymakers in Nigeria kept their benchmark rate on hold at 11.50% at today’s MPC meeting, opting to emphasise the fragile nature of the economic recovery over elevated inflation. With price pressures likely to ease, we think that monetary policy …
25th May 2021
Bank Indonesia (BI) left interest rates unchanged at 3.5% today and signalled that it was in no rush to adjust its monetary policy settings again this year. We expect interest rates to remain low to support the recovery for some considerable time. The …
Policymakers in South Africa kept their benchmark rate unchanged at 3.50% today, while laying the foundations for normalising monetary policy. We think that rate hikes are some time off as the Reserve Bank’s focus will remain squarely on supporting a weak …
20th May 2021
The Bank of Canada has voiced concern about the loonie although, following the signs of emerging inflationary pressures in April, it will probably be more welcoming of the disinflationary impact of the strong currency. Either way, the Bank’s concern about …
Commercial banks left the Loan Prime Rate (LPR) unchanged for the 13 th consecutive month today. Official goals for reining in credit have already been achieved by other means. As such, we do not expect any changes to policy rates in the coming months. …
The statement accompanying the Banxico Board’s decision to keep the policy rate at 4.00% suggests that policymakers’ concerns about inflation risks are growing, but it doesn’t change our view that they will keep rates unchanged throughout this year and …
14th May 2021
The central bank in the Philippines (BSP) left its main policy rate on hold at 2.00% today, and while a temporary rise in inflation means interest rates are set to remain unchanged for the next few months, the dire economic outlook means the central bank …
12th May 2021
The Czech National Bank (CNB) left its two-week repo rate on hold at 0.25% today and backtracked on its recent dovish guidance about the timing of policy tightening. We expect a first 25bp interest rate hike in November, but the risks are becoming …
6th May 2021
The statement accompanying Brazil’s central bank meeting, at which it raised the Selic rate by 75bp to 3.50%, was more hawkish than the previous one. While we doubt that the tightening cycle will go as far as most expect, the risks to our forecast for a …
The fact that Bank Negara Malaysia (BNM) left its policy rate on hold at 1.75% today despite the worsening economic outlook means any further loosening is unlikely. But with the recovery set to be slow and fitful, we think BNM will leave interest rates at …
The Bank of Thailand (BoT) left interest rates on hold at 0.5% today and sounded very downbeat on the prospects for the recovery. The poor outlook for the economy means rates are likely to remain unchanged well beyond the end of the year. The decision …
5th May 2021
In an unscheduled announcement today, RBI Governor Shaktikanta Das unveiled an array of measures aimed at mitigating the economic and financial impact of India’s virus crisis. This Update takes stock of those measures and outlines what they might mean for …
The Reserve Bank of Australia upgraded its forecasts for GDP growth and inflation but reiterated that it is prepared to extend its asset purchases. We stick to our forecast of another $100bn extension in the Bank’s bond purchase program, though this would …
4th May 2021
Although it took a more upbeat tone on the economic outlook and acknowledged that inflation has risen in its statement released after today’s FOMC meeting, the Fed offered no hints that it was considering slowing the pace of its asset purchases, let alone …
28th April 2021
Russia’s central bank (CBR) hiked its policy rate by 50bp, to 5.00%, at today’s meeting and the accompanying statement strengthened the central bank’s hawkish message about the need for additional tightening to bring inflation back to target. We think …
23rd April 2021
The minutes of the Reserve Bank’s April policy meeting – in which interest rates were left unchanged – show that the MPC is committed to keeping policy accommodative to support the economic recovery. The surge in virus cases since that meeting is only …
Bank Indonesia (BI) left interest rates unchanged at 3.5% today, and despite the downbeat outlook for the economy we see little room for further rate cuts this year. Today’s decision was correctly predicted by all 35 analysts polled by Bloomberg, …
20th April 2021
Commercial banks left the Loan Prime Rate (LPR) on hold today. Given that official efforts to rein in credit are being achieved by other means, we do not expect any changes to policy rates in the coming months. The one-year LPR was unchanged at 3.85% …
The decision by the Turkish central bank (CBRT) to leave its policy rate at 19.00% was accompanied by reassuring language that the MPC, under new governor Sahap Kavciouglu, aims to bring down inflation. But the language also suggests that they are looking …
15th April 2021
The Bank of Korea (BoK) left its main policy rate on hold at 0.50% today and given that the recovery still has some way to go, the BoK is likely to leave policy accommodative for the rest of 2021. The decision to hold was unanimous and expected by all 20 …
The Reserve Bank of New Zealand (RBNZ) stuck to its dovish stance when it left policy settings unchanged today, but we still expect the Bank to raise rates towards the end of next year. As expected, the Bank did not adjust its policy rate or its asset …
14th April 2021
