Filtered by Topic: Monetary Policy Use setting Monetary Policy
The further rise in Egyptian inflation in October, taking it above the upper bound of the central bank’s end-year target range, raises the risk that policymakers will hike interest rates at this week’s MPC meeting. But with underlying price pressures …
12th November 2018
The results of this week’s midterm elections were in line with expectations, but President Donald Trump’s unexpected decision to fire his Attorney General Jeff Sessions would seem to reduce the odds of a bipartisan fiscal stimulus with the House …
9th November 2018
A bill to make Brazil’s central bank formally independent, which has been rumoured this week, would boost market optimism about Jair Bolsonaro’s reform promise and have positive long-term economic effects. Elsewhere, markets are pricing in an interest …
The opening up of Vietnam’s economy has gathered pace over the pace couple of months, with the government pressing ahead with a series of reforms which should boost the country’s economic prospects. Regional growth looks to have slowed in Q3. Of the six …
October’s weaker-than-expected inflation data suggest that the Norges Bank will be in no hurry to raise interest rates again. We expect it to wait until next March before making its next move, and then to end its tightening cycle sooner than investors …
Both the Reserve Bank of Australia and the Reserve Bank of New Zealand displayed a little more confidence in their optimistic forecasts when they left interest rates unchanged this week. We think that in both economies, GDP growth will fall well short of …
As universally anticipated, the Fed left rates on hold today and there was nothing in the policy statement to suggest that officials are wavering from their plans to hike interest rates again in December. … December rate hike …
8th November 2018
The slowdown in quarterly euro-zone GDP growth to just 0.2% in Q3 came as a major disappointment, but there are good reasons to expect the economic expansion to regain a little pace in the quarters ahead. For a start, we estimate that about half of the …
China is the only major economy which is likely to implement a significant policy stimulus in the coming year. However, its impact on the rest of the world will be small. … China stimulus will not prevent global …
Bank Negara Malaysia today left interest rates unchanged at 3.25% and gave no hint in its accompanying statement that it is in a rush to change its policy stance anytime soon. Whereas the consensus is expecting the central bank to resume its tightening …
We expect the slowdown in GDP growth in Q3 to continue over the coming quarters as the economy faces headwinds from tighter monetary policy and a weakening external environment. … Philippines GDP …
The Reserve Bank of New Zealand (RBNZ) lifted its inflation forecasts a little bit when it decided to leave interest rates unchanged at 1.75% today. But it still signalled that rates won’t rise until late in 2020. We are more pessimistic about the outlook …
7th November 2018
The relatively more hawkish tone adopted by the Polish MPC in its post-meeting press conference today suggests that the start of a monetary tightening cycle isn’t too far away. We think that policymakers will raise their policy interest rate around the …
The slightly smaller-than-expected increase in Brazilian inflation last month, to 4.6% y/y, reinforces our view that Copom will hold off from starting a tightening cycle for a few more months. … Brazil IPCA …
Higher inflation and inflation expectations have prompted the Central Bank of Iceland to raise interest rates today, sooner than we had anticipated. And as upcoming wage negotiations look likely to result in inflation-busting pay deals, we expect the Bank …
The hawkish tone of the Bank of England’s “Super Thursday” announcements have helped to push up interest rate expectations a little and have fuelled a rise in sterling over the past week. But we doubt that investors have gone far enough in revising up …
6th November 2018
The recent uptick in Chilean unemployment has prompted some analysts to suggest that interest rates may not rise much further. But the central bank doesn’t seem too concerned and we think that any weakness that does exist in the labour market will soon …
The slightly smaller-than-expected rise in Russian inflation, to 3.5% y/y, last month supports our view that the central bank will refrain from tightening monetary policy further. Markets, in contrast, are still pricing in some additional interest rate …
The upward revision to the RBA’s growth and inflation forecasts suggest that the Bank is moving closer to tightening policy. But we still think that the downturn in the housing market will result in slower growth before long and retain our forecast that …
The large fall in the PMIs in October suggests that the economy slowed sharply at the start of Q4. Admittedly, some slowdown from rolling three-month GDP growth of 0.7% in July and August always looked likely. Indeed, much of that strength can be put down …
5th November 2018
Concerns that “super minister” Paulo Guedes’ plan to reduce the Brazilian government’s interest payments by selling FX reserves would increase external vulnerabilities look overdone. However, the plan would only make a minor dent in the country’s fiscal …
The benefits of the government’s demonetisation policy should be evident by now, two years after the shock announcement that the bulk of the country’s bank notes were being withdrawn. But the promised gains haven’t materialised and the positive …
Philip “the fiscal hawk” Hammond was surprisingly generous in the Budget on Monday, spending his entire windfall from the downward revision to the OBR’s borrowing forecast. This means that rather than acting as a small headwind on growth next year, fiscal …
2nd November 2018
Surveys published this week suggest that the Swiss economy is faltering after a strong first half of 2018, while inflationary pressures remain weak. This supports our view that the SNB will keep interest rates on hold much longer than investors expect. By …
The Politburo statement this week gave a clear signal that further policy support for China’s economy is on the way. But with headwinds building, we don’t expect to see clear signs of economic stabilisation for some time yet. That statement, plus the …
The betting odds suggest that there are few uncertainties surrounding the broad outcomes of Tuesday’s midterm elections, with the Democrats likely to win control of the House while the Republicans maintain a majority in the Senate. That is most likely to …
Inflation can now be added to the list of problems facing Pakistan after figures published today showed headline inflation rose to a four-year high last month. Meanwhile, the chances of an improvement in policymaking look to be receding, with Prime …
The latest comments from Turkey’s central bank suggest that policymakers are considering unwinding some of the recent rate hikes, reinforcing our view that the MPC isn’t serious about tackling the country’s inflation problem. Meanwhile, PMI data released …
While the minutes to the Riksbank’s October meeting all but confirmed that interest rates will start to rise in the coming months, a December hike is not a done deal. But regardless of whether the Bank starts tightening in December or February, we think …
The announcement that the Trans-Pacific Partnership will come into force on 30th December is important in a number of ways. Not only should it provide a boost to growth prospects across parts of Asia, but it also shows that, despite the shift towards …
Rising tension between the government and the RBI has dominated headlines this week, and also caused jitters in local markets. This comes as little surprise - after all, at the heart of the matter is the independence of the central bank. Any erosion of …
The fiscal loosening announced in the Autumn Budget has prompted us to raise our forecasts for GDP growth and interest rates. In our base case, which assumes a Brexit deal is secured, we now expect GDP to rise by 2.2% next year and by 2.0% in 2020 (up …
1st November 2018
The forecasts accompanying today’s Czech monetary policy meeting imply that the CNB’s tightening cycle is now finished. Following seven interest hikes, we agree that the bulk of tightening has already happened, but we think that there is still scope for …
The “Super Thursday” releases from the Bank of England support our view that the Monetary Policy Committee (MPC) will raise interest rates more quickly than markets expect, if a Brexit deal is struck. … MPC hints rates will rise quicker than markets …
The Brazilian Central Bank’s (BCB’s) statement from last night’s meeting hints that Copom is waiting to see if president-elect Jair Bolsonaro can deliver on his reform promise when he takes office at the start of 2019. We now expect the Selic rate to stay …
The Reserve Bank of New Zealand will keep interest rates unchanged at 1.75% at the policy meeting on Thursday 8th November, with recent encouraging economic data making a cut less likely. Even so, we think that future economic activity will fall short of …
The Reserve Bank of Australia (RBA) will welcome the continued tightening of the labour market when it holds interest rates steady at 1.50% on Melbourne Cup Day, which falls on Tuesday 6th November. But with the housing downturn accelerating and inflation …
Although the Fed is unlikely to make any policy changes at next week’s meeting, we expect the statement to reiterate the FOMC’s plan to continue gradually raising interest rates, with the next move coming in December. With the latest data showing that …
31st October 2018
The current political crisis in Sri Lanka, which has seen the country’s president, Maithripala Sirisena, replace Prime Minister Ranil Wickremesinghe with former President Mahinda Rajapaksa, comes at a bad time for the economy. Growth has been very weak …
Price pressures eased in Kenya and Uganda in October, and we think that inflation will remain within target in both countries. Kenyan policymakers will probably keep their key rate on hold in 2019, while their Ugandan peers will hike rates once more in …
Growth in most of Emerging Europe will continue to slow over the next couple of years, and by more than most expect. The slowdown is set to be sharpest in Turkey, where the recent currency crisis will result in a slump in domestic demand, pushing the …
Despite the recent plunge in equity prices, it looks highly likely that the Fed will raise interest rates again in December and then press ahead with two more rate hikes in the first half of 2019. But a slowdown in the US economy should discourage Fed …
The Indian government is treading on dangerous ground with a number of moves that could put the independence of the Reserve Bank of India (RBI) at risk. A loss of credibility for the central bank could jeopardise its efforts to rein in inflation, which …
The Bank of Japan seems to be getting a little more worried about the impact of prolonged easing on financial stability. However, the looming sales tax hike and the downgrade to the BoJ’s inflation forecasts underline that policy tightening remains a long …
Political developments have re-emerged as a key risk to the region’s economic outlook in recent weeks. The economic fallout for Saudi Arabia from the Khashoggi scandal should be limited, at least in the near-term. The threat of sanctions has weighed on …
30th October 2018
The direct impact on Mexico’s economy resulting from president-elect Andrés Manuel López Obrador’s decision to scrap the Texcoco airport project will be small, but it is the clearest sign yet that policymaking will be more interventionist and …
Policymakers in South Africa and Nigeria both laid out fiscal plans this month, but their responses to weak revenues were very different. South Africa’s new finance minister announced a wider deficit in 2019, while Nigerian officials promised to cut …
The People’s Bank (PBOC) appears to have stepped up intervention recently to support the renminbi as it has approached 7.0 to the US dollar. Many are talking about that line as a psychological threshold that would trigger capital outflows if breached. We …
29th October 2018
With the effective fed funds rate getting close to the top of its target range again, there’s a good chance that the Fed will combine a 25bp hike in the fed funds target range in December with another smaller 20bp hike in the interest on excess reserves …
Comments from Brazil’s president-elect suggesting that the central bank should target the exchange rate have made headlines today but his post-election comments otherwise point to orthodox macroeconomic policy. More importantly, the extent of Mr. …
