Filtered by Topic: Monetary Policy Use setting Monetary Policy
We expect stimulus to shore up growth in the next few months. But with the scale of policy support smaller than in previous downturns, the sharp economic rebound that some are expecting is unlikely. … Policy restraint to limit scale of …
12th April 2019
The Monetary Authority of Singapore (MAS) today left its policy settings unchanged, but given the worsening outlook for the economy, we think it will loosen policy at its next meeting in October. … Singapore: weak growth to prompt loosening from …
Economic growth across Africa as a whole will remain weak in 2019 due to very poor performances from Nigeria and South Africa. Conditions will probably improve next year, but regional growth will be weaker than most analysts expect. We think that East …
11th April 2019
The second delay to Brexit, to 31st October 2019, and developments overseas have altered the assumptions that underpin our UK economic forecasts. As such, we have tweaked those forecasts. The main takeaways are that both GDP growth and interest rates …
We expect GDP growth across Emerging Asia to be very weak this year, with a number of countries set to grow at their weakest rates since the global financial crisis. A key drag will come from falling exports – our forecasts for the global economy suggest …
The Argentine central bank’s pledges to keep monetary policy tighter for longer have helped to stave off a run on the currency in recent weeks. But by keeping the economy weak ahead of October’s election, the measures will weigh on President Macri’s …
10th April 2019
President Draghi’s comments at today’s press conference suggest that the ECB will announce the terms of the TLTRO-III programme in June, which we suspect will be more generous than previous TLTROs. But we still think the Bank will need to do more to …
We hold below-consensus growth forecasts for the Gulf States, where oil output cuts and renewed fiscal austerity will result in a sharp slowdown. We are, by contrast, relatively optimistic about the prospects for Egypt, as well as Morocco, where growth is …
A slowing global economy will magnify the headwinds from the housing downturn in Australia and slower net migration in New Zealand. We think that GDP growth will slow more sharply than most anticipate and expect central banks in both countries to lower …
9th April 2019
The Fed began publishing interest rate projections submitted by FOMC participants as far back as 2012, but in the past seven years only one maverick official has ever forecast a cut in interest rates. As markets are now beginning to price in the prospect …
8th April 2019
During a speech this week, Bank of Canada Governor Stephen Poloz refused to commit to the possibility of further rate hikes and suggested that the neutral range was not a good target for investors to have in mind when it comes to the future direction of …
5th April 2019
Markets no longer expect further monetary easing in China but we aren’t convinced. Headwinds to growth look set to resurface as support from fiscal front-loading wanes, at which stage the stimulus baton is likely to be passed back to the People’s Bank. … …
After making some fairly big changes in early March, the ECB will probably be happy to leave things as they are at next week’s meeting. President Draghi will have no choice but to give a downbeat assessment of the economic outlook, which will probably set …
4th April 2019
The account of the ECB’s 7th March monetary policy meeting makes gloomy reading. It confirms that policymakers were worried about downside risks to their growth and inflation forecasts, even though they had only just been revised down, and that they were …
The RBI has delivered another pre-election gift to the government by lowering rates at a second successive meeting. A low level of headline inflation provided justification for the move. But with core inflation high, and a growing perception that the …
We expect GDP growth to slow from 2.9% to 2.0% this year and only 1.4% in 2020. That weakness should convince the Fed to reverse course and cut interest rates by a cumulative 75bp, with the first reduction probably now coming before the end of this year. …
3rd April 2019
The Bank of Canada’s belief that the policy rate is still far below its neutral level looks doubtful. In fact, market pricing implies monetary policy is as restrictive as it was on the eve of the global financial crisis. … Policy not as loose as Poloz …
2nd April 2019
The Reserve Bank of Australia sounded more cautious when it left interest rates unchanged at 1.50% today. With the full impact of the housing downturn on economic activity yet to be felt, we think the Bank will start to cut interest rates soon, perhaps as …
The statement accompanying the Chilean central bank’s decision to hold its policy rate at 3.00% on Friday night signalled that rates are likely to stay on hold for longer than they had previously anticipated. Our forecast for rates to remain unchanged …
1st April 2019
Speeches by policymakers this week suggest that the ECB is likely to provide more policy accommodation within the next six months or so. All the more so as the latest survey data continue to point to an economy which is losing momentum. … Draghi dovish, …
29th March 2019
The State Bank of Pakistan (SBP) today raised its policy rate by a further 50bp to 10.75%, and we think further rate hikes are likely over the coming months due to worries about high inflation and the country’s large current account deficit. … Pakistan …
The upcoming Moody’s review of South African debt has raised fresh concerns about a sell-off in the country’s bond market. But we think that these fears are overdone. Meanwhile, central bank meetings this week reinforced our view that policymakers are …
The partial inversion of the Treasury yield curve has attracted a lot of attention over the past week, but we have been more surprised by the speed at which markets have started to price in rate cuts. Market expectations have almost caught up to our …
If it is introduced (which is far from certain) a tiered deposit rate would reduce the cost of negative interest rates for banks, but it would do so by only a trivial amount. Its main purpose would be to help to build support for, or buy off opposition …
The sharp fall in JGB yields in recent weeks means that the Bank of Japan will probably lower its JGB purchases more quickly than we had anticipated. In fact, there’s a chance that the Bank may soon have to sell rather than buy JGBs in order to defend its …
The Egyptian central bank’s decision today to keep interest rates unchanged (rather than cut rates) appears to have been a result of the jump in inflation in February. But if we’re right that inflation will fall again over the coming months, the easing …
28th March 2019
The flattening of yields curves over recent weeks has raised fears of a sharp economic slowdown to come. Central banks are unlikely to be led by the views of bond markets, not least because their actions and comments have driven at least part of the …
The Czech National Bank made clear that it is more concerned about the impact of weakness in the euro-zone than strong domestic inflationary pressures. We still think that above-target inflation may trigger more tightening this year, but we have revised …
The South African Reserve Bank’s (relatively) dovish post-meeting communications support our view that the next move in interest rates will be down (probably in early 2020). The markets have moved towards our view and no longer expect hikes, but they …
We expect GDP growth to slow to only 1.0% this year, as the housing downturn weighs on the domestic economy and exports are held back by the global slowdown. That weakness should prompt the Bank of Canada to cut interest rates in the second half of this …
A sharp fall in earnings for industrial firms in January and February shows the pressure that weak demand is putting firms’ balance sheets under. We think officials will respond by cutting benchmark lending rates over the weeks ahead. … Weak profits …
27th March 2019
The pick-up in broad money growth to a six-year high in February is not necessarily a positive for the economy because it is a lagging indicator. But it does at least suggest the Fed’s balance sheet run-down, which officials announced will end in …
Malaysia’s central bank (BNM) today dropped its clearest hint yet that interest rate cuts are on the way after it lowered its growth forecasts for this year and pledged that monetary policy would be supportive. In its annual report, BNM cut its GDP growth …
We believe that GDP growth in Australia will fall well below potential this year as the housing downturn bites. That means that unemployment will soon start to rise again and underlying inflation will remain well below the lower end of the Reserve Bank of …
The MPC is likely to use the recent confirmation that GDP growth slowed in Q4 and the current low rate of headline inflation as justification for another interest rate cut at the conclusion of its policy meeting on Thursday 4th April. But with core …
The RBNZ took a surprising dovish turn when it left the official cash rate on hold at 1.75% today, indicating that the next move is likely down. Given that we are more downbeat about the outlook for GDP growth than the Ban, we think the Bank is likely to …
While our GDP growth forecasts are far below consensus, the narrowing and even outright inversion of parts of the yield curve in the past month suggests that investors also have little faith in the consensus view that economic growth will accelerate later …
26th March 2019
Today’s very small interest rate hike in Hungary was the least that policymakers could do to show their commitment to the inflation target. But so long as key euro-zone export markets don’t weaken much further from here, today’s move is unlikely to be the …
Today’s rate cut was another signal that Nigerian policymakers are prioritising monetary stimulus over their own inflation target. We doubt that this cut – which will probably be the first in a cycle – will do much to boost growth. But it will further …
If the past is anything to go by, a fresh round of ECB QE would lead to upward pressure on the Danish krone. We think Denmark’s Nationalbank would react with a combination of FX intervention and rate cuts, which would see it reduce its key policy rate to …
The Reserve Bank of Australia (RBA) will welcome the continued tightening of the labour market when it leaves rates unchanged at 1.50% at its policy meeting on Tuesday 2nd April. But we’ve become even more concerned about the outlook for economic activity …
Given the prospects for monetary policy, we forecast that that the rally in government bonds will continue in the US; run out of steam in Germany and Japan; and reverse in the UK if a “no-deal” Brexit is avoided. … Prospects for government bonds remain …
25th March 2019
By making it clear that interest rates will not be raised this year and that quantitative tightening will start to wind down earlier than previously suggested, the Fed was even more dovish this week than most had anticipated. It wasn’t all positive news, …
22nd March 2019
The Central Bank of Russia’s dovish tilt today has prompted us to bring forward some of the interest rate cuts that we had been anticipating in 2020. We now think that the policy rate will be lowered from its current rate of 7.75% to 7.25% by the end of …
This week delivered more data which suggest that the euro-zone economy grew at a meagre pace in Q1. And the Composite PMI is now at a level where the ECB has often loosened monetary policy in the past. … Euro-zone likely to have grown slowly again in …
In a week when the Fed called time on its tightening cycle, and further signs of weakness in euro-zone activity lent extra support to our view that the ECB will ultimately have to do more to ease policy, the Norges Bank stands out as a rare example of a …
The delay granted by the EU last night has pushed back Brexit by at least two weeks, from 29th March to 12th April, but four options remain on the table – deal, no deal, no Brexit or another delay. So it still makes sense to have different scenarios for …
We are now more hawkish than the consensus about the outlook for monetary policy in Norway this year. But we don’t expect the krone to keep strengthening, as we forecast that oil prices will fall. … Monetary policy likely to prevent weaker …
We now believe GDP growth will slow to 1.5% in 2019, which would be well below the analyst consensus of around 2.5%. And we suspect that the recent uptick in the unemployment rate in New South Wales and Victoria will be followed by rising unemployment …
