Filtered by Topic: Monetary Policy Use setting Monetary Policy
Overview – The Bank of Japan will stay on the sidelines for a few more months as GDP growth softens and trade tensions cloud the outlook. But with the labour market set to remain very tight, wages rising strongly and inflation on track to overshoot the …
23rd June 2025
The Summary of Deliberations from the Bank of Canada’s June policy meeting, released on Tuesday, revealed it held rates for three reasons: the economy had slowed but not significantly, uncertainty remained high, and recent inflation data had firmed. …
20th June 2025
Copom & BCCh: hawks & doves This week's rate decisions in Chile and Brazil showed a stark contrast in messaging. While Chile’s central bank (BCCh) left its policy rate unchanged at 5.00%, its communications were relatively dovish. It sounded less …
Growth boost for Korea More policy support in Korea looks to be on its way soon. According to the minutes of the Bank of Korea’s May meeting (when rates were cut a further 25bps) which were released earlier this week, Board members were united on the need …
The early evidence suggests that EM exports have held up well, despite higher US tariffs. That’s partly because exporters have front-loaded shipments to the US or (in China's case) have avoided high tariffs by shipping via third countries. So long as this …
Downside risks persist in Australia Australian employment unexpectedly fell by 2,500 last month, as a 38,700 rise in full-time employment was more than offset by a 41,200 fall in part-time employment. However, with the unemployment rate holding steady at …
Case for tighter monetary policy remains strong The Bank of Japan tweaked its bond purchases at this week’s meeting but retained the dovish tone adopted at its May meeting. Indeed, the minutes of the May meeting showed that Board members were worried …
Overview – The Israel-Iran conflict creates significant uncertainty over the outlook. Our working assumption is that it eases relatively soon, in which case economic growth across the region should pick up. But the turn to fiscal tightening in the Gulf …
19th June 2025
We’re discussing the outlook for Bank of England, Fed and ECB policy in a 20-minute online Drop-In at 3pm BST today. (Register here .) And a t our in-person Roundtables in London on Tuesday 1 st July, clients can discuss with our economists and their …
Dovish hold supports our view of August cut and rates falling to 3.50% or below next year The Bank of England sounded a bit more dovish while leaving interest rates at 4.25% today, despite the extra upside risks to inflation from events in the Middle …
CBRT still sounding hawkish, but cuts on the cards The statement accompanying the Turkish central bank’s decision to leave its key interest rates unchanged was hawkish, suggesting that policymakers want to push back against expectations for aggressive …
Taiwan’s central bank (CBC) left its main policy rate on hold today (at 2.0%) and we expect interest rates to remain unchanged for the foreseeable future. In contrast, most other analysts are expecting rate cuts to begin in Q4. The decision to keep rates …
Surprise cut by Norges Bank but no rush to cut again Norges Bank’s surprise decision to cut its policy rate to 4.25% today – the first in this cycle – is not a sign that policymakers are suddenly in a rush for much looser monetary policy. We expect a very …
SNB will cut rates again later this year The SNB decision to cut by just 25bp today means that it has avoided negative rates for the time being. But we think that continued deflation over the coming months will prompt policymakers to cut again at their …
With inflation set to stay low, BSP to cut rates further The central bank in the Philippines (BSP) today cut its main policy rate by a further 25bps (to 5.25%), and the dovish tone from the central bank’s statement and press conference suggests further …
We continue to think Treasury yields will rise, as the Fed stays on hold longer than investors expect. There was minimal market reaction on Wednesday (local time) to a cautious Fed : policy was left on hold, the statement was almost unchanged, and the …
RBA’s easing cycle has further to run Labour market and population data published today are sending mixed signals about capacity pressures in the Australian economy. Either way, they probably won’t prevent the RBA from cutting rates further in the months …
Despite strong bounce in Q1, economy not out of the woods yet Although New Zealand’s recovery gained traction last quarter, there are signs that the upshift in momentum will prove short-lived. Accordingly, we still think there’s a strong case for the RBNZ …
Copom provides a hawkish hint that tightening cycle is over Brazil’s central bank opted, as we had expected, for a 25bp hike in the Selic today to 15.00% and, while the tightening cycle is probably now over, Copom went out of its way to push back against …
18th June 2025
The Fed will remain on the sidelines for some time, waiting to see what impact tariffs will have on price inflation. We suspect that lingering fears of a more persistent impact will persuade the Fed to hold off cutting interest rates until the first half …
Fed splitting into two camps The Fed’s new interest rate projections still just about show a median of 50bp of cuts to its policy rate for this year, but it was very close. Back in March, 11 of 19 officials anticipated two 25bp cuts this year, with four …
Overview – Emerging Europe is generally less vulnerable than other EM regions to higher US import tariffs, but we have still nudged down some of our GDP growth forecasts for this year. We think the region will follow diverging paths – with Czechia and …
This Update outlines potential outcomes of the Iran-Israel conflict and teases out the implications for the region, the global economy and commodity and financial markets. One point that emerges is that an escalation of the conflict still leaves multiple …
Low inflation suggests SARB’s easing cycle has more room to run The fact that South Africa’s headline inflation was unchanged at 2.8% y/y in May, lends more evidence that the SARB should be unworried about underlying price pressures in the economy. Coming …
Riksbank cuts, but will probably not cut again While the Riksbank cut its policy rate by 25bp this morning and suggested there was a reasonable chance of a further cut this year, the outlook is uncertain and underlying economic conditions aren’t quite as …
BI to resume easing cycle soon Bank Indonesia today left interest rates unchanged at 5.50%, but as dovish comments in the press conference by Governor Perry Warjiyo make clear, this is unlikely to mark the end of the central bank’s easing cycle. We are …
This page has been updated with additional analysis since first publication. We’ll be discussing the outlook for Bank of England, Fed and ECB policy in a 20 minute online Drop-In at 3pm BST on Thursday 19 th June. (Register here .) We're hosting in-person …
Mexico has weathered the US’s shift toward protectionism better than many feared just a few months ago, but the economy is still likely to struggle this year. While the rest of the region is relatively insulated from the trade war, lower commodity prices …
17th June 2025
The Bank of Japan decided to taper its bond purchases at a slower pace from next year and retained its pessimistic outlook for the economy. However, we expect that mounting upside risks to the Bank’s inflation forecasts will prompt the Bank to hike rates …
Bank of Japan will hike rates again before year-end The Bank of Japan decided to reduce its bond purchases at a slower speed from next year but gave little away in terms of the outlook for interest rates. With inflation set to surpass the Board’s …
The Colombian government’s fiscal plans unveiled late on Friday will have dashed any lingering hopes that policymakers would try to stabilise the public debt-to-GDP ratio, at least ahead of next year’s election. This points to further downward pressure on …
16th June 2025
Mexico’s exports holding up well … so far Figures out this week provided further evidence that Mexico's exports have been relatively resilient in the face of US import tariffs. Auto exports (compiled by local trade body AMIA) were down 3% y/y in May …
13th June 2025
Following Israeli strikes against Iranian nuclear and military targets, and Iranian counterstrikes, Group Chief Economist Neil Shearing lays out what investors should be watching for across macro and markets. Among other issues, Neil also explains: Why – …
BoJ’s pause won’t last as long as most expect The main show in town next week will be the Bank of Japan’s meeting on Tuesday. As we explain in our BoJ Watch , the Board will almost certainly leave its policy rate unchanged, given its concerns about the …
Downside risks growing There are growing signs that economic conditions in Australia have continued to weaken. According to a new NAB business survey, business conditions fell to their lowest point since August 2020 last month. On past form, the data are …
Falling employment and easing wage growth suggest MPC won’t slow pace of cuts Growing chance that rates fall below 3.50% Limited influence of rate cuts pose questions over speed of QT The Bank of England will almost certainly leave interest rates at 4.25% …
12th June 2025
We'll be online discussing the outlook for Latin American economies and financial markets in an online briefing on Wednesday 18th at 10am ET/3pm BST . Sign up here . Overview – Mexico has emerged from the US’s shift to protectionism better than was feared …
Headline inflation drops to 75-month low; has now bottomed out India’s headline consumer price inflation fell to a 75-month low of 2.8% y/y in May. Inflation may now have bottomed out, but we think it will rise only very gradually back towards the Reserve …
While it will be close call, we think the SNB is most likely to cut its policy rate by 50bp next week, bringing it back below zero. That would leave little room for more rate cuts further ahead. At its last meeting , the SNB reduced its policy rate by …
We expect Norges Bank to wait a bit longer before it finally starts to cut interest rates. And as the economy is growing at a decent pace and the labour market is still tight, the Bank is likely to cut interest rates quite gradually in the second half of …
Underlying economic strength signals no need to cut Updated SEP may feature higher median interest rate projection Speculation around Powell’s replacement will plague proceedings We expect the underlying strength in the economy and uncertainty over the …
11th June 2025
Canada Chart Pack (June 2025) …
On balance, we think the Riksbank is likely to wait until its August meeting before cutting interest rates again in order to get greater clarity on the outlook for the economy. After a 25bp cut in August, we think the Bank will leave its policy rate at 2% …
Euro-zone GDP rose strongly in Q1 but the economy will struggle in the rest of this year as tariff front-running ends and higher US tariffs start to weigh more heavily on activity. Increased defence and infrastructure spending will then support GDP growth …
10th June 2025
Inflation drops, but Copom likely to hike one final time next week The slightly larger-than-expected fall in Brazil’s headline inflation, to 5.3% y/y, was driven by weaker food inflation. Underlying price pressures continued to strengthen and, against …
Board will remain downbeat about economic prospects for a while However, inflation set to surpass Bank’s forecasts by large margin We expect the Bank to hike again in October We suspect that the Bank of Japan will stick to its downbeat outlook for …
This page has been updated with additional analysis since first publication. Looser labour market driving softer wage pressures With payrolls plunging, the unemployment rate climbing and wage growth easing, today’s labour market release leaves us more …
Inflation rise won’t prevent further cuts from Banxico Mexico’s headline inflation rate jumped to 4.4% y/y in May but this was mainly driven by stronger non-core prices and so is unlikely to trouble officials at the central bank. Indeed, with the economy …
9th June 2025
Note: we will be online to discuss India’s macro and markets outlook and to take your questions at 9am BST/4.00pm SGT on Tuesday, 10 th June. Register for the event here . Overview – India’s economy has had a strong first half of the year and is poised …
Nigeria floods: worse to come? The flooding Nigeria has faced in recent weeks has claimed scores of lives and, while the economic hit should be limited, the country’s vulnerability to further climate challenges is worryingly high. We should first note the …
6th June 2025
