Filtered by Topic: Monetary Policy Region: G10 Use setting G10 Use setting Monetary Policy
As had been widely expected, the RBA handed down a 25bp rate hike at its meeting today. With the cash rate now at 4.35%, we believe the Bank’s tightening cycle is over. If we’re right that the Australian economy will soon take a turn for the worse, rate …
7th November 2023
RBA’s next move will be down With today’s widely anticipated rate rise now behind us, we believe the RBA’s tightening cycle is at an end. The RBA’s decision to lift its cash rate by 25bp at today’s meeting came as a surprise to few. Indeed, 35 out of 39 …
Group Chief Economist Neil Shearing is back to discuss what the recent data say about the global economic outlook – including October US payrolls and China PMIs – and what to expect from the Fed, ECB and Bank of England following their decisions to keep …
3rd November 2023
There is now mounting evidence that the economy is set for a renewed slowdown in the fourth quarter and that inflationary pressures from the labour market continue to ease. Although markets have already moved to price out any real chance of further rate …
We can understand if the phase “the lady doth protest too much” sprang to mind when listening to the Bank of England after it left interest rates at 5.25% for the second meeting in a row on Thursday. Indeed, the Old Lady of Threadneedle Street stressed so …
Threat of yen intervention remains As we had expected, the Bank of Japan retained its 1% cap for 10-year yields at this week’s meeting . However, by downgrading that cap to a “reference” and by stopping its daily fixed-rate operations offering to buy an …
We’ll be discussing the latest Fed, ECB and Bank of England policy decisions in a 20-minute Drop-In webinar at 3pm GMT today. (Register here .) The Bank’s decision to leave interest rates at 5.25% for the second time in a row and to double down on the …
2nd November 2023
Bank doubles-down on rates staying high for long The Bank’s decision to leave interest rates at 5.25% for the second time in a row and the doubling down on the message that rates cuts are a long way away supports our view that Bank Rate will stay at 5.25% …
By leaving rates unchanged while continuing to flag the possibility of further tightening to come, the Fed indicated today that it remains in ‘wait and see’ mode. But Chair Jerome Powell appeared to strike a more dovish tone in his press conference and we …
1st November 2023
Fed’s tightening bias likely to be dropped soon By leaving rates unchanged while continuing to flag the possibility of further tightening to come, the Fed indicated today that it remains in ‘wait and see’ mode. But we suspect the data over the coming …
With wage growth set to strengthen further over the coming year, we think the Bank of Japan will soon have sufficient confidence in the sustainability of higher inflation to end negative interest rates . The Bank of Japan has been arguing that wage growth …
The Bank of Japan today de facto abolished Yield Curve Control and we think policymakers will call time on negative interest rates as soon as January . A casual reading of today’s statement would suggest that policy settings were left unchanged: the Bank …
31st October 2023
RBA will hike by 25bp next week as inflation and labour market continue to run hot But there will be a high bar for additional tightening further down the road As the economy takes a turn for the worse, rate cuts still likely in Q2 2024 With inflation …
We are resending this publication because it was incorrectly sent as a Japan Economics Update. Note: We'll be discussing h ow much of a threat are surging bond yields to Asia’s economies in our Asia Drop-in today, 31st October. Register here to join the …
Note: We'll be discussing h ow much of a threat are surging bond yields to Asia’s economies in our Asia Drop-in today, 31st October. Register here to join the online briefing. Bank of Japan will tighten policy further next year The Bank of Japan today de …
While we think sticky core inflation will mean that the Bank of England keeps interest rates at their peak of 5.25% until late in 2024, we think the markets have gone too far in concluding that rates will still be as high as 4.50% by the end of 2025. We …
30th October 2023
It's Fed week and Deputy Chief US Economist joins David Wilder to discuss what to expect from the Tuesday-Wednesday FOMC meeting, including how the recent surge in long bond yields could influence the decision and accompanying language. Andrew also …
29th October 2023
The Bank of Canada’s insistence that inflationary risks have increased seems at odds with its new forecasts, which show a large degree of economic slack opening up next year. Our view that the Bank is still overestimating the near-term outlook for both …
27th October 2023
Note: We’ll be discussing the latest Fed, ECB and Bank of England policy decisions in a Drop-In at 3pm GMT on Thursday 2 nd November . (Register here .) In the last few months there has been more concern over the accuracy of key economic data. The recent …
In line with our upwardly revised forecasts for the 10-year US Treasury yield, we’ve raised our projections for 10-year government bond yields in most other developed market economies. But we still expect those yields to fall, in general, by the end of …
BoJ probably won’t tweak Yield Curve Control Media reports suggest that the Bank of Japan may tweak Yield Curve Control yet again at next week’s Board meeting. That’s certainly possible: 10-year JGB yields have risen sharply since the launch of the new …
RBA has more work to do Most of the data published this week highlight the imperative for the RBA tighten policy. To start with, Wednesday’s CPI release showed that Australia’s inflation problem is far from over. In fact, there are two pieces of …
Norges Bank is almost certain to leave its policy rate unchanged at 4.25% next week. And we suspect that, given September’s weak inflation data, it will also soften its language about implementing one final rate hike in December. Next year, we think the …
26th October 2023
Strong immigration is unlikely to be enough to prevent a mild recession, with GDP contracting recently and the business surveys consistent with further declines. As house prices are falling again, household debt is elevated and high interest rates are …
25th October 2023
Although the Bank of Canada maintained its tightening bias today, the rest of its communications suggest that the Bank is growing more confident it has done enough to eventually get inflation back to 2%. We continue to expect the Bank to cut interest …
Fed to hold rates at 5.25%-5.50%, and keep further tightening on the table… …but surging long-term Treasury yields reducing appetite for final hike Sharp decline in core inflation to see rates cut to 3.25%-3.50% by end-2024 We don’t expect a significant …
This page has been updated with additional analysis since first publication. RBA to hike again as inflation surprises on the upside With price pressures being slower to abate than the RBA had anticipated, we think the Bank will deliver one final 25bp …
The October flash PMI surveys suggest that economic activity got off to a weak start in Q4, especially in Europe. And with weak activity taking some of the steam out of labour markets and inflation, we are growing more confident in our view that the Fed, …
24th October 2023
Overview – Global headline inflation has fallen sharply from its peak a year ago and, despite a temporary setback due to higher fuel inflation, we expect it to fall a lot further over the coming year. The huge drag from energy inflation is now largely in …
Board will revise up FY2023 inflation forecasts but signal below-target inflation in 2025 We don’t expect any tweaks to Yield Curve Control but the policy is effectively over Negative rates will end in early-2024, YCC will formally be abandoned by …
The apparent strength of third-quarter GDP growth won’t convince the Fed to resume hiking its policy rate, particularly with the ongoing surge in long-term bond yields presenting a growing threat to the economy. Q3 GDP growth strong Despite the recent hit …
20th October 2023
The renewed surge in long-term Treasury yields illustrates that the full impact of Fed tightening is still feeding through, and we continue to expect economic growth to slow sharply over the coming quarters. With core inflation still looking on course to …
One more hike for the road Labour market data published yesterday showed that Australia's unemployment rate fell anew, from 3.7% to 3.6% in September, due largely to a pullback in workforce participation. As we explained in this Update , it increasingly …
Export values hit record high in September Export volumes bounced back by 4.6% m/m in September following the 6.1% m/m plunge in August. However, that left them a touch below the record high reached in July and means that export volumes have largely tread …
Japan’s trade unions are demanding an even larger pay hike in the upcoming spring wage negotiations and we believe that the talks will result in a base pay hike of around 2.5%. While the Bank of Japan may wait until the first round of results of the talks …
Senior economists from across our euro-zone, US and UK services held an online briefing on the October/November meetings of the Fed, ECB and Bank of England and the latest messaging from their policymakers. During this 20-minute briefing, the team …
19th October 2023
We'll be discussing the implications of the end of the ultra-low interest rates era and the rise in r* in an online Drop-In at 12:30 GMT on Tuesday 31st October. (Register here .) As our new higher estimate of the real neutral interest rate, or r*, for …
Recession risks rising and inflation falling again Bank to remain on hold but stress too soon to declare victory Bank’s latest analysis implies QT could continue until as late as 2026 The business surveys point to rising recession risks and core inflation …
18th October 2023
The ongoing outflow of funds from the Fed’s reverse repo facility has completely offset the downward pressure on bank reserves from quantitative tightening (QT), suggesting that the Fed could continue to let its asset holdings run down for longer than …
The weakness of GDP growth in the second and third quarters means that the Bank of Canada is likely to make a marked re-assessment of its output gap estimates in its October Monetary Policy Report (MPR). Some indicators suggest that output has already …
Economists from our ANZ and Markets teams held an online briefing following the release of Australian Q3 inflation data. During this discussion, Asia-Pacific head Marcel Thieliant, ANZ Economist Abhijit Surya and Senior Markets Economist Tom Mathews …
17th October 2023
Chapter 3: Where will inflation (and nominal rates) settle? …
Chapter 2: How will the savings/investment balance affect r*? …
