Filtered by Topic: Monetary Policy Use setting Monetary Policy
In an otherwise quiet month for EM markets, the sharp falls in the Mexican peso and Turkish lira have stood out. In each case, the triggers have been different – the 7% fall in the peso against the dollar since the start of the month reflects concerns …
20th October 2017
The steady economic expansion in advanced economies is set to continue for the next year or two, led by rising household consumption and business investment. Although most economies are approaching full employment, inflation will probably remain subdued. …
19th October 2017
Today’s decision by Bank Indonesia to leave interest rates unchanged at 4.25% probably represents a pause in the central bank’s easing cycle, rather than a halt. We continue to think that with inflationary pressures under control and the economy …
The ECB has now laid some very firm groundwork to announce after its meeting on 26th October that it will taper its asset purchases from January. Unlike most forecasters, we expect the Bank to set out a full roadmap to taper down to zero by next …
The Riksbank is unlikely to shift its policy stance until it sees firmer signals of the outlook for policy in the euro-zone. So despite above-target inflation in Sweden, we do not expect the Riksbank to announce any changes to its policies or forward …
The recent slowdown in the housing market suggests that there is scope for monetary policy to be looser over the coming years than the Norges Bank currently anticipates. That said, we don’t expect any changes in policy, or the Bank’s forward guidance, at …
We are not yet changing our forecasts for GDP growth, inflation, interest rates or the dollar due to the news that a Labour-NZ First-Greens coalition led by Jacinda Ardern will form the next government, but the less growth-friendly policies of those …
The minutes of the Reserve Bank of India’s (RBI’s) October policy meeting reveal that most members expressed caution about recent fiscal developments and the inflation outlook. Indeed, with inflation data for September showing a further rise in core price …
The Bank of Korea (BoK) left interest rates on hold today and the governor’s accompanying press conference makes clear that monetary policy will remain accommodative. We continue to expect the policy rate to be kept at 1.25% not just for the rest of this …
The Bank of Canada will probably err on the side of caution at its policy meeting next week by deciding to keep interest rates at 1.00%. Although the Bank still seems confident in the economy, NAFTA renegotiations are clearly going from bad to worse. In …
18th October 2017
Employment growth came off the boil a little in August. But with surveys of hiring suggesting that this will be a temporary development while wage growth more-or-less maintained its recent pace, we think the Monetary Policy Committee is still on course …
The centre-right ANO is likely to emerge as the single largest party in Friday’s parliamentary election in the Czech Republic, which may open the door to looser fiscal policy. That said, there are reasons to think that any fiscal stimulus would be more …
17th October 2017
The rise in CPI inflation in September took it close to its eventual peak and supports our view that the Monetary Policy Committee (MPC) will press ahead and raise interest rates in November. … Consumer Prices & Producer …
The modest rise in headline and underlying price pressures in the third quarter doesn’t dramatically alter the outlook for interest rates, but at the margin it indicates that rates may rise a little bit earlier than the RBNZ’s current suggestion of …
Wholesale price inflation unexpectedly eased in September. But stripping out the effect of volatile fuel and food prices, our measure of core WPI inflation accelerated further last month. With reasons to think that core price pressures will rise further …
16th October 2017
Core inflation rose to a near six-year high last month and producer price inflation continued to rebound, consistent with resilient growth ahead of the Party Congress. But the credit data suggest that tighter monetary conditions are weighing on lending, …
For most countries, our forecasts are a little bit below those of both the consensus and the IMF. However, there are three economies, Hong Kong, the Philippines and Pakistan where we think other forecasters are being much too optimistic for next year, and …
13th October 2017
The 0.5% m/m rise in headline consumer prices in September was driven by a spike in gasoline prices due to Hurricane Harvey, while there was a more muted 0.1% rise in core consumer prices. But the latter partly reflects a drop back in vehicle and drug …
Peru’s central bank left its policy interest rate unchanged at 3.50% last night, and while there could be scope to ease policy a little further in the next 3-6 months, as things stand we expect rates to remain unchanged over the next year. … Peru’s …
The Monetary Authority of Singapore (MAS) today left its monetary policy settings unchanged. The accompanying statement gives the MAS room to tighten policy if necessary, but given the subdued outlook for inflation we don’t think this will happen any time …
Interest rate hikes are commonly thought to cause recessions. However, the track record of G7 tightening cycles shows that this has usually not been the case. Central banks in the US and Canada are in the midst of policy tightening cycles, and the …
12th October 2017
While headline consumer price inflation was unchanged last month, core inflation rose again. Policymakers will put less weight on the erratic industrial production data that were also released today but, for what they are worth, they signal that output …
We believe the financial markets have gone too far by pricing in a strong possibility that the Reserve Bank of Australia will raise interest rates twice next year, from 1.5% to 2.0%. Economic conditions won’t be good enough to warrant higher rates and …
We expect global growth to slow only modestly as the era of easy money starts drawing to a close. The monetary tightening is set to be gradual, limited and staggered, with some countries only starting to tighten as others are finishing. And the …
11th October 2017
Victory for Prime Minister Abe in this month’s election would keep Japan on the same track it has been on since 2012, pursuing fiscal tightening, loose monetary policy and tentative structural reform. Given the economy’s relatively strong recent growth …
10th October 2017
The drop in Mexican inflation last month is likely to be the start of a rapid downwards trend and we expect the headline rate to fall back into the central bank’s target range by the middle of next year. Even so, interest rate cuts are unlikely to come …
9th October 2017
The rise in Czech inflation to a five-year high of 2.7% y/y in September supports our view that the next hike in the policy interest rate – taking it from 0.25% to 0.50% – will come at the CNB Board meeting in early November. … Czech CPI …
We expect consumer price inflation to have fallen in September as a shift in the timing of Mid-Autumn Festival probably caused a drop in food price inflation last month. This will reverse in October and food inflation is likely to rise further in the …
6th October 2017
September’s data confirm that the sharp drop in inflation in Brazil is bottoming out. This supports the view that Copom is likely to slow the pace of easing at this month’s policy meeting. … Brazil & Chile Consumer Prices …
Given the subdued outlook for inflation, we think the Monetary Authority of Singapore (MAS) will leave its policy settings unchanged not just at next week’s meeting, but throughout 2018 as well. In contrast, a growing number of analysts expect monetary …
Consumer price inflation is likely to have accelerated further in September, due in large part to another rise in vegetable price inflation. Core price pressures are also building, meaning there is no scope for further policy loosening. … Core price …
Economic growth looks set to strengthen in most EMs over the next year, but the cycle is now close to peaking in China and parts of Central and Eastern Europe. … Nearing the cyclical …
5th October 2017
The drop in Russian inflation to a fresh low of 3.0% y/y in September means that another cut in interest rates is all but guaranteed at this month’s CBR Board meeting. The fact that core inflation softened opens up the possibility of another 50bp cut but, …
Growth across the Middle East and North Africa has slowed further this year, but it should recover in 2018 and 2019. In the Gulf, the drag on GDP growth from this year’s oil production cuts will fade. Nonetheless, the recovery will be slow-going. Fiscal …
Poland’s MPC left interest rates unchanged today and the press statement and conference that followed struck a dovish tone. While headline inflation is likely to edge down in the final months of this year, we expect a pick-up in core inflation to cause …
4th October 2017
Despite the increased likelihood of looser fiscal policy next year following the collapse of the government last month, the Central Bank of Iceland (CBI) today opted to cut interest rates. We suspect that the CBI has now reached the end of its loosening …
The Reserve Bank of India (RBI) went with consensus expectations by keeping its repo rate on hold at 6.00% today. It also acknowledged the growing upside risks to the inflation outlook. As such, renewed policy loosening is unlikely. … RBI holds rates, …
Our recreated M3 measure shows broad money growth accelerating to a 12-month high of 4.6% in August, from 4.3%, although the Fed’s quantitative tightening will put modest downward pressure on the monetary aggregates for the next few years. … Monetary …
3rd October 2017
The Romanian MPC’s decision to raise its overnight deposit interest rate represents a move to tighten monetary policy – even though the policy rate was left unchanged. Policymakers struck a fairly hawkish tone in the post-meeting press statement and …
The jump in Turkish inflation, to 11.2% y/y last month, from 10.7% y/y in August, means that the interest rate cuts we had expected before the end of this year are looking less likely. We still think inflation will fall over the next six to nine months, …
The Reserve Bank of Australia may have left interest rates at 1.5% for the 14th month today, but its growing confidence in the outlook for activity and inflation may mean it will be prepared to signal early next year that it’s getting close to raising …
The debate surrounding the four candidates who were interviewed to become the next Fed Chair has focused almost exclusively on how they might affect the monetary policy outlook, but we suspect it will be the winning candidate’s views on regulatory policy …
2nd October 2017
The People’s Bank gave its devotees a twinge of nostalgia on Saturday as it announced a cut to reserve requirements out of office hours and at the start of a national holiday in China. This was how monetary policy announcements used to be made. But the …
After another soft start to the year, US economic growth is now benefitting from an upturn in global activity and a loosening of financial conditions. The weaker dollar should boost export growth, while domestic demand should benefit from low long-term …
Growth in Emerging Europe has generally surprised on the upside in recent quarters, which is consistent with the above-consensus forecasts we made at the start of this year. We expect further positive surprises from Russia over the next year but think …
Although the Fed is starting to shrink its balance sheet and the ECB is likely to taper its asset purchases next year, the monetary base in the world as a whole should continue expanding at least until 2019. … Global QE to remain positive for a while …
Private non-financial companies are unlikely to have any difficulty coping with increases in interest costs ahead. First, the scale of the increase in Bank Rate is set to be fairly trivial by past standards. Second, firms’ profitability has recovered to …
29th September 2017
In her speech earlier this week, Chair Janet Yellen stressed that, despite the weakness of core inflation this year, the Fed still intends to push ahead with further interest rate hikes, with most officials expecting to raise rates before the end of this …
Whereas the consensus is expecting monetary policy in Emerging Asia to be tightened next year, we think central banks will be in little hurry to raise interest rates. One of the main reasons is the subdued outlook for inflation, which is likely to remain …
The statement accompanying last night’s decision by Egypt’s central bank to leave interest rates on hold suggests that, with inflation now falling, policymakers are trying to downplay expectations that monetary easing will quickly follow. Accordingly, a …
