Filtered by Topic: Monetary Policy Use setting Monetary Policy
We now expect the ECB to cut interest rates by 25bp at each of its next four meetings, taking the deposit rate down from 3.5% currently to 2.5% in March. Following Christine Lagarde’s comments to the Committee on Economic and Monetary Affairs yesterday, …
1st October 2024
This page has been updated with additional analysis since first publication. Services inflation remains sticky The drop in euro-zone headline inflation below 2% in September should be sufficient to persuade the ECB to cut rates in October, even though …
Overview – We are not expecting the planned fiscal policies of the government to derail the economy – we expect GDP to grow by 1.0% this year and by a decent 1.5% in both 2025 and 2026. Instead, the main influence of the government’s plans to raise public …
We recently held a series of Asia-focussed roundtable discussions with clients in London, covering an array of topics including the impact of Fed easing, the US election, global fracturing and China’s stimulus blizzard. This Update answers several of …
Headline GDP growth in the Gulf economies will strengthen in 2025 as oil output cuts are unwound. But lower oil prices will prompt a turn to fiscal consolidation in most of the Gulf, causing growth in non-oil sectors to slow. Elsewhere, balance sheets in …
30th September 2024
The strike by Israel in Lebanon that killed Hezbollah’s leader represents a major escalation of hostilities in the Middle East and all eyes are now on the next actions by Israel and Iran. On its own, this escalation would point to higher oil prices and …
German state data point to sticky core inflation CPI inflation data published by the major German states this morning suggest that headline HICP inflation fell sharply in both Germany and the euro-zone in September, as was widely expected. But core and …
China’s leadership finally took action this week to staunch the economy’s bleeding with a flurry of stimulus announcements and pledges to do more. But will it be enough? Group Chief Economist Neil Shearing talks to David Wilder about whether the outlook …
27th September 2024
Economists from our China and Markets teams held a special briefing to assess the recent flurry of stimulus announcements from Beijing. During this, the team answered audience questions as they addressed key issues around the China outlook in light of …
Overview – A pivot towards fiscal and monetary stimulus should support China’s growth in the near-term. But the economy continues to be propped up by investment, still elevated levels of construction, and the willingness of trading partners to allow …
CBN rate hikes about inflation and credibility The Central Bank of Nigeria’s surprise hike this week highlighted the greater progress that the MPC wants to see on the inflation front and also importantly its steadfast ambition to restore its trust and …
Worrying signs in the CFIB Business Barometer Although the CFIB Business Barometer covers only small firms, in recent years the survey indicators have provided a fairly accurate steer to economic conditions. The headline index fell to 55.0 in September …
Fiscal risks in Romania continue to build Romania’s fiscal watchdog this week warned that the country’s budget deficit could come in at 8.0% of GDP this year. This is significantly above the government’s original target of 5.0% and also above its new …
Government hinting about more investment The government appears to be laying the ground for a rise in public investment in the Budget on 30 th October. This week the Chancellor said “growth is the challenge and investment is the solution.” That was …
A 25bp interest rate cut by the ECB at its next meeting in mid-October is now more-or-less fully priced into the market. The decision will be a close call, but a cut is far from a foregone conclusion. Our base case remains that the Bank will wait until …
Africa Chart Pack (Sep. 2024) …
Stimulus implementation gets underway A flurry of policy announcements propelled the largest weekly gains in Chinese equities since 2008 this week (CSI 300 up 15.7%; Hang Seng 13.0%). The catalyst was Tuesday’s stimulus announcement , which included …
Services inflation starting to fall September’s inflation data from France and Spain all but confirm that the headline rate in the euro-zone as a whole – released next week – will show a sharp decline to below the 2% target. Headline HICP inflation fell …
BoJ set to press ahead with "stupid" rate hikes Japan won’t have its first female Prime Minister after all as former defense minister Shigeru Ishiba won the runoff in the LDP leadership election against economic security minister Sanae Takaichi. In …
Cuts still won't come as soon as markets expect As expected, the RBA left rates unchanged at its meeting this Tuesday. Reading between the lines, however, the Bank does appear to have toned down its hawkish bias somewhat. Indeed, it’s worth noting that …
Inflation and growth backdrop supports further easing Mexico’s central bank delivered another 25bp interest rate cut at today’s meeting, to 10.50%, and the communications suggest that it will continue to ease policy over the coming months. We expect the …
26th September 2024
Table of Key Forecasts Global Overview – The global economy has hit a soft patch with the euro-zone virtually stagnant, the US labour market flagging and China rationing its policy stimulus. We expect this weakness to persist around the turn of the year …
While the SNB only cut the policy rate by 25bp today to 1.0%, the accompanying statement was very dovish and indicated that there are at least two more rate cuts on the way, probably in 25bp increments in December and March. Despite the emphasis on the …
Economies across Emerging Europe have struggled recently, and we forecast below consensus GDP growth in most countries this year. The export-orientated economies of Central and Eastern Europe will be held back by stagnating demand from key euro-zone …
SNB makes dovish 25bp cut, more to come The SNB’s decision to cut its policy rate by 25bp to 1.0% today shows that it prefers a gradual approach to policy loosening, but the accompanying statement indicates clearly that further cuts are on the way. The …
Leadership hints at further stimulus measures The readout of the Politburo’s quarterly meeting on economic affairs has just been published by state media. It acknowledges that new problems have emerged in the Chinese economy recently and calls for …
While the announcement of new stimulus measures by Chinese officials coincided with increases in many commodity prices, the package does not materially alter the outlook for China’s commodity demand. This could change if fiscal stimulus was announced – …
25th September 2024
The economy is cooling but remains primed to grow by 6.0-6.5% per year between 2024 and 2026, which would put India on course to become the world’s third-largest economy in the next couple of years. Headline CPI inflation is likely to remain close to the …
Your one-stop-shop guide to global monetary policymaking includes two-year policy rate forecasts for all the major DM and EM central banks plus links to our latest meeting previews and reactions. If you have subscriber access to the data underlying this …
Explore our forecasts to end-2026 for GDP growth, inflation, policy rates and commodity prices. To explore our policy rate forecasts in more detail, please visit our Central Bank Hub dashboard. If you have subscriber access to the data underlying this …
Overview – With the inflation battle all but won, weak GDP growth will force the Bank of Canada into more aggressive action, with a couple of 50bp interest rate cuts to end this year. We expect the Bank to adopt a more measured pace of loosening in 2025, …
Growth across Latin America is likely to be weaker than most expect in the next couple of years amid tight policy and worsening terms of trade. Even so, inflation is likely to stay above central banks’ targets in many countries. This means that monetary …
CNB cuts by 25bp again, easing cycle has further to run The decision by the Czech National Bank (CNB) to cut its policy rate by a further 25bp today, to 4.25%, was followed by communications which, on balance, felt a bit more dovish than at the last …
Inflation falls, but Copom still on course to deliver further rate hikes The larger-than-expected decline in Brazil’s headline inflation rate, to 4.1% y/y, in the first half of September is unlikely to prevent Copom from raising interest rates further …
We held an online Drop-In session this week to discuss the outlook for the euro-zone. (See a recording here .) This Update addresses some of the questions that we received, including some that we didn’t have time for during the event, starting with …
The Riksbank’s decision to cut by 25bp today to 3.25% was all but guaranteed, but the accompanying statement was surprisingly dovish. Policymakers said the policy rate could be cut faster and further than previously indicated, while also raising the …
Table of Key Forecasts Overview – Aggregate EM growth is entering a softer patch, despite the tailwind from the Fed’s easing cycle. Growth concerns will prompt central banks in much of Asia to cut interest rates. But stubborn inflation pressures elsewhere …
Overview – A combination of falling inflation and looser monetary policy should help growth to accelerate across Sub-Saharan Africa from early next year. But tight fiscal policy will constrain the recovery and our growth forecasts sit below the consensus. …
Last week I participated in a small roundtable with investors and economists. It was notable – if not entirely surprising – that the broad topics of conversation chimed with a lot of recent discussions I’ve been having with Capital Economics' clients: How …
Riksbank cuts policy rate and raises prospect of a 50bp cut this year The Riksbank’s decision to cut the policy rate by 25bp today to 3.25% was all but guaranteed, but the accompanying statement was surprisingly dovish and policymakers raised the prospect …
Overview – A tight labour market and elevated public demand will keep the RBA from loosening policy before early-2025. Moreover, we expect the forthcoming easing cycle to be short-lived by past standards. By contrast, the more pressing need to stem the …
This page has been updated with additional analysis since first publication. Disinflation gathers pace The Reserve Bank of Australia will look past the sharp fall in headline inflation in August, given that the plunge was driven in large part government …
Cardoso’s surprise 50bp hike may not be the last The Central Bank of Nigeria surprised many by raising its policy rate by 50bp to 27.25%, at its meeting today, and Governor Cardoso’s hawkishness about the risks emanating from sticky inflation, energy …
24th September 2024
Fall in inflation paves the way for another rate cut The larger-than-expected fall in Mexican inflation in the first half of September, to 4.7% y/y, supports our view that Banxico will continue its easing cycle with another 25bp cut on Thursday. The …
Easing cycle resumes ... for now The communications accompanying the decision by the Hungarian central bank (MNB) to resume its easing cycle today suggests that the central bank could pause interest rate cuts again very soon. We expect just one further …
The RBA didn’t discuss a rate hike at today’s meeting for the first time since March but reiterated its pledge that it won’t cut interest rates “in the near-term”. While the risks are starting to tilt towards an earlier rate cut, we’re sticking to our …
The government tried to prevent the Bank of Japan from hiking interest rates in 2000 but that attempt was unsuccessful and the government has respected the Bank’s independence ever since. Renewed efforts to bring the BoJ to heel look unlikely now given …
RBA will only cut in first half of next year The RBA sounded marginally less hawkish today but we still expect the Bank to only lower interest rates in Q2 2025. As widely anticipated, the Bank kept its policy rate unchanged at 4.35%. The key elements of …
But still falls short of what’s needed In a departure from their previous approach of drip-feeding piecemeal support measures, China’s financial regulators have just announced a coordinated package of stimulus measures. This is a step in the right …
Overview – With inflation normalising due to improving supply, the Fed is in the fortuitous position of being able to lower interest rates even though economic growth remains solid and the unemployment rate is still relatively low. Despite the downshift …
23rd September 2024
