Filtered by Topic: Monetary Policy Region: G10 Use setting G10 Use setting Monetary Policy
This page has been updated with additional analysis since first publication. RBNZ still on course to loosen policy aggressively Economic activity in New Zealand last quarter wasn’t quite as weak as most had anticipated. However, we still think there’s a …
19th September 2024
The Fed did cut its policy rate by a bigger 50bp today, to between 4.75% and 5.00%, but the vote was not unanimous and the new rate projections point to smaller 25bp cuts at the remaining two FOMC meetings this year. Accordingly, today’s announcement is …
18th September 2024
A hawkish 50 The Fed did cut its policy rate by a bigger 50bp, to between 4.75% and 5.00%, but the vote was not unanimous and the new rate projections only shows an additional 50bp of cuts between now and the end of this year. Accordingly, today’s …
This page has been updated with additional analysis since first publication. Rise in services inflation makes September rate cut even less likely CPI inflation stayed at 2.2% in August (consensus & CE 2.2%, BoE 2.4%), but the rise in services inflation …
Limited data flow since August meeting broadly in line with RBA’s expectations Bank will therefore reiterate pledge to keep rates unchanged this year First rate cut will happen in Q2 next year The Reserve Bank of Australia will probably stick to its …
17th September 2024
As the much-anticipated start of Fed easing approaches, the debate has centred on whether Powell & Co. will opt for a 25 or a 50-basis point rate cut. On the latest episode of The Weekly Briefing from Capital Economics, Group Chief Economist Neil …
14th September 2024
25bp vs 50bp debate finely poised The 25bp vs 50bp debate seemed settled following Governor Christopher Waller’s speech shortly after the August Employment Report, in which he suggested that he was leaning toward the smaller move. The cautious tone of …
13th September 2024
The sharp rebounds in both residential and non-residential building permit issuance in July eased concerns that the construction sector is about to take a turn for the worse. Risks remain, however, particularly for residential construction in Toronto. …
We think the markets are wrong to expect two more interest rate cuts this year But we think rates will be cut more quickly next year and to 3.00% in early 2026 MPC may speed up QT by announcing a £110bn reduction in the balance sheet We agree with the …
The public sector isn’t the main game In a speech this week, RBA Assistant Governor Sarah Hunter reiterated the Bank’s view that conditions in the labour market are currently not conducive to “wages growing at a rate consistent with achieving the …
Stronger yen reducing upside risks to inflation Developments over the past week seem to support the consensus view that the Bank of Japan will wait at least until December before hiking interest rates again. After all, the yen reached a fresh high against …
The structural deterioration in the fiscal situation suggests that a tight grip on the public finances in the Budget on 30 th October will be necessary. That’s why we think the government will maintain existing plans for fiscal policy to be tightened, but …
12th September 2024
Global Economics Chart Pack (September 2024) …
Stronger yen has reduced upside risks to inflation, but labour shortages persist Recent data should have enhanced Bank’s confidence in its central scenario Bank will hike rates in October, but refrain from tightening any further in 2025 The Bank of …
Recent data favour a 25bp vs a 50bp interest rate cut in September New SEP to show more cuts this year We expect 200bp of cumulative rate cuts vs 250bp priced into markets With the labour market data more consistent with an economic slowdown rather than …
11th September 2024
The Reserve Bank of New Zealand has always ended up cutting interest rates by more than it anticipated at the start of previous easing cycles. We think this time won’t be any different and expect the Bank to cut rates to 2.25% at the end of its easing …
10th September 2024
Unemployment rate drops back The 142,000 rise in non-farm payrolls and fall in the unemployment rate to 4.2% confirmed that some of the weakness in July was due to temporary factors, with the number of people on temporary layoff falling by 190,000. That …
6th September 2024
That August payrolls report was one of the more keenly awaited data releases in a while – but what do its details suggest about how the Fed is likely to start monetary easing when it meets later this month? On the latest episode of The Weekly Briefing …
The communications from the Bank of Canada this week suggest that the rise in the unemployment rate in August is unlikely to be enough to trigger larger interest rate cuts, which is probably a sign that the Bank is comfortable with the extent of loosening …
RBA will need to see more progress on inflation National accounts data released this Wednesday made for grim reading. They confirmed that Australia’s run of sluggish activity continued in Q2, with real GDP rising by a tepid 0.2% q/q for a third …
Regular pay growth hits 32-year high According to preliminary figures for July , regular wage growth jumped from 2.2% y/y to 2.7%, which is where we had expected it to peak in the second half of this year. And an alternative gauge that the Bank of Japan …
The economy looks to be entering a period of below-potential growth, characterised by excess supply in the goods and labour markets. This will keep downward pressure on core inflation, which we think will reach the Bank of Canada’s 2% target by the middle …
5th September 2024
Overview – The economy is on the mend and underlying inflation seems to be levelling off around the Bank of Japan’s 2% target. Accordingly, we still expect a final rate hike in October. But as inflation falls below target next year and the spring wage …
Following its third consecutive 25bp interest rate cut today, the communications from the Bank of Canada reiterated that further cuts are likely. We expect 25 bp cuts at the final two meetings this year. While Governor Tiff Macklem left the door open to a …
4th September 2024
Another 25bp cut, but little sign the Bank considered a larger move Following its third consecutive 25bp interest rate cut today, the communications from the Bank of Canada reiterated that further interest rate cuts are likely. The tone of the …
Second-quarter GDP growth surprised to the upside of the Bank of Canada’s forecast, but the evidence that growth slowed sharply over the quarter suggests that third-quarter growth will be much weaker than the Bank is anticipating. That raises the chance …
30th August 2024
Activity rebounding, inflation levelling off at 2% The activity and inflation data released today increase our conviction that the Bank of Japan will press ahead with another rate hike. The rebound in industrial production and the rise in retail sales in …
Core inflation to come in lower than Bank’s forecast Economic growth remains below potential Bank to cut interest rates by 25bp at each meeting until 2.50% The dovish communication following the last meeting and the encouraging July CPI report leave …
28th August 2024
Wage growth is starting to outpace inflation and with real incomes rising, the rebound in consumer spending has further to run. While underlying inflation will fall further below 2% over the coming months, we still expect the Bank to hike rates once more …
26th August 2024
On the latest episode of The Weekly Briefing from Capital Economics , Group Chief Economist Neil Shearing and Stephen Brown, our Deputy Chief North America Economist, give their take on what Jerome Powell said to the Fed’s annual gathering at Jackson …
23rd August 2024
The dovish speech from Chair Jerome Powell at the Jackson Hole Symposium suggests that the Fed will be choosing between a 25bp and a 50bp cut at its meeting in September. A 50bp cut would look less likely if the unemployment rate drops back this month, …
Dovish Powell hints at potential for 50 bp cut Fed Chair Jerome Powell’s dovish tone at Jackson Hole today and pledge to do “everything we can to support a strong labour market” implies that a 50 bp cut could be on the table at the September meeting, …
The muted gains in the Bank of Canada’s preferred core price measures in July make another interest rate cut at the September meeting seem inevitable. The Bank will be encouraged by the second soft monthly gain in rents, which may be a sign that we have …
Underlying inflation falling below 2% According to a recent survey, 57% of analysts predict another rate hike by year-end, with one-third thinking it will happen in October and the remainder favouring the December meeting. In his parliamentary hearing …
Restrictive policy will do its job Earlier this week the Reserve Bank of Australia published the minutes of its August meeting, which showed that the Board remains concerned about upside inflation risks. In particular, the Bank noted that there was likely …
Fed minutes confirm September rate cut The minutes of the Fed’s late July policy meeting showed broad agreement that “it would likely be appropriate to ease policy at the next meeting” in September. While the weak July Employment Report released since …
21st August 2024
We don’t think the slew of inflation-busting public sector pay deals that have been agreed by the new government will prevent wage growth from slowing next year to the rates of 3.0-3.5% we think are consistent with the 2.0% inflation target. But the big …
After a summer of extraordinary economic, market and political developments, what can investors expect through the end of 2024? Our senior economists held this special briefing all about the risks we’re watching in the final months of the year. During …
20th August 2024
RBA won’t be rushed into rate cuts The minutes of the RBA’s August meeting confirmed what we already knew from Governor Bullock's post-meeting press conference: the Board discussed the case for a 25bp hike before ultimately deciding to leave rates …
The weaker July employment report and another set of mild inflation data mean the Fed remains on track to cut interest rates in September. With the activity data still supportive of our view that the economy is heading for a soft landing, we doubt the Fed …
19th August 2024
The global macroeconomic risks surrounding a possible ceasefire deal between Israel and Hamas are asymmetric. An agreement – while having significant economic consequences for countries in the region – would probably not itself be a game-changer for …
While we expect inflation to fall below the Bank of Japan’s 2% next year, the Bank’s still very accommodative stance means that this alone won’t trigger interest rate cuts. We think it would require a major downturn in activity that results in a looser …
As markets have come roaring back from the recent growth scare, Group Chief Economist Neil Shearing talks to Jennifer McKeown, Capital Economics’ Chief Global Economist, about the true state of the global economy and the outlook for policy. Their …
18th August 2024
The good news just kept coming this week. The economy grew by an above-trend rate for the second quarter in a row in Q2 (see here ), the unemployment rate fell to 4.2%, well below most estimates of the natural rate of around 4.50%. (See here .) And at …
16th August 2024
Real labour incomes rising again The 0.8% q/q rise in Q2 GDP was stronger than most had anticipated though close to our Nowcast estimate. The main driver was a 1% q/q jump in consumption, the first increase following four consecutive quarterly falls. That …
Downside risks abound in New Zealand Our non-consensus call that the RBNZ would start normalising policy this week came to fruition, with the Bank handing down its first rate cut in over four years. But while the Committee reached a full consensus that it …
This page has been updated with additional analysis since first publication. Soft surprise opens the door to more interest rate cuts later this year The smaller-than-expected rise in CPI inflation from 2.0% in June to 2.2% in July (consensus forecast …
14th August 2024
