Filtered by Topic: Monetary Policy Use setting Monetary Policy
Consumer spending has grown at a steady if unspectacular pace across Emerging Asia over the past few years, comfortably outperforming other EM regions. Spending in the region should continue to grow at a decent pace, but headwinds are starting to mount in …
7th April 2017
Peru’s central bank kept its policy interest rate on hold at 4.25% and, while the accompanying statement struck a dovish tone, the risk of a surge in inflation means rate cuts are unlikely. That said, with the economy likely to have weakened further in …
While the economy should continue to grow at a robust pace, price pressures will strengthen only slowly. And with the sales tax hike scheduled for end-2019 clouding the outlook, the Bank of Japan is unlikely to tighten policy anytime soon. Growth has been …
Consumer price inflation is likely to have risen again in March, due in large part to another acceleration in food inflation. Further ahead, rising core price pressures could prompt the RBI to follow up yesterday’s hike to the reverse repo rate with a …
Venezuela has hit the headlines for all the wrong reasons over the past week, with the Supreme Court first annulling the National Assembly before then partly reversing its decision. However, a change in the so-called “Hydrocarbons Law” has slipped under …
6th April 2017
The Reserve Bank of India (RBI) opted to keep its benchmark repo rate on hold today, but the hike to the reverse repo rate represents a shift towards tighter monetary policy. Looking ahead, with inflation set to accelerate further, we think that hikes to …
March’s Swiss inflation data do little to alter the picture of extremely subdued price pressures. With the core rate barely positive and inflation expectations very low, we expect the Swiss National Bank to maintain supportive policies including FX …
Central banks in Switzerland, Sweden and Norway have all voiced concerns about overheating in their housing markets. In Switzerland, macro-prudential policies have already served to cool house price inflation and there is scope to do more. This should …
5th April 2017
The relatively dovish stance taken by the Polish MPC at today’s post-meeting press conference reinforces our view that monetary tightening is a long way off. We only expect interest rate hikes to come in 2018. While the Romanian MPC also struck a fairly …
We expect the Bank of Canada to hold interest rates at 0.50% next week and to remain neutral on the direction of interest rates in the near future. Despite economic slack and muted core inflation, economic growth has continued to surprise on the upside. …
While the outlook for UK monetary policy is highly uncertain, the economy’s continued resilience suggests that interest rates will rise sooner and more quickly than is generally anticipated. … Economy’s resilience points to earlier rise in interest …
The Reserve Bank of Australia (RBA) was always going to leave interest rates at 1.5% today, but there are some subtle signs that the Bank is becoming more concerned about the outlook for the labour market and underlying inflation, but less concerned about …
4th April 2017
Financial markets appear to be ignoring the Bank of Canada’s latest warnings about the uncertain economic outlook and are pricing in an interest rate hike before the end of this year. In contrast, we think there are good reasons why monetary policy in …
31st March 2017
March’s sharp slowdown in euro-zone inflation was partly driven by temporary factors that will reverse in April, but the big picture is that inflation is now on a downward trend. So we expect the ECB to continue purchasing assets and leave interest rates …
The US Treasury is due to report this month which of its major trading partners, if any, have been manipulating their currencies for unfair advantage. No country in Emerging Asia meets the criteria currently laid down by the US Treasury. However, the …
The Egyptian central bank’s decision to leave interest rates unchanged today confirmed that policymakers are looking through the recent surge in inflation but, while inflation should start to fall soon, any loosening of monetary policy is still some way …
30th March 2017
We think the next Czech MPC meeting on 4th May is the most likely date for a lifting of the koruna cap, but today’s comments by the Council have raised the risk that it happens outside of a scheduled monetary policy meeting (perhaps as soon as next …
Today’s statement by the governor of the SARB suggests that policymakers will look through the current political crisis. Indeed, the tone of the statement – and the fact that one member voted for a cut – supports our view that the tightening cycle is now …
A recent acceleration in producer prices of services combined with more upbeat survey evidence suggest that the prices that consumers pay for services will soon start picking up again. However, there is still a long way to go to reach the Bank of Japan’s …
Policymakers in the world’s major central banks have struck a more hawkish tone in recent weeks, but we expect policy to be tightened only in the US this year. While the ECB may announce plans to taper its asset purchases as soon as September, suggestions …
29th March 2017
Economic growth has picked up recently, but we aren’t convinced the economy has turned the corner, particularly not when that growth is still so unbalanced. Non-commodity exports are lagging and business investment will decline further this year. …
With the economy showing signs of recovery and inflation back within its target band, the Bank of Thailand’s (BoT) decision to leave interest rates on hold at 1.50% today came as no surprise. Looking ahead, we expect rates to remain unchanged for the rest …
Evidence of a sharp turnaround in growth and policymakers’ success in preventing a destabilising slide in the renminbi have underpinned a dramatic shift in sentiment towards China. But there are good reasons to expect growth to slow again soon and for the …
28th March 2017
The scandal over Brazil’s meat sector, which at one point appeared to threaten the country’s economic recovery, seems to have faded just as quickly as it escalated. The crisis exploded following the revelation earlier this month that the authorities had …
The press release accompanying the Hungarian MPC’s meeting earlier today remained dovish, but we think the Council is probably underestimating how quickly inflation will rise in the second half of this year. That could prompt the MPC to unwind its …
The Monetary Policy Committee might be relieved to see the pound regaining a bit of ground in recent weeks. But it shouldn’t want the exchange rate to rise too far. … The MPC’s sterling …
The ECB’s forward guidance about asset purchases and an extended period of low interest rates need not prevent it from starting to normalise policy should the inflation outlook so warrant. But it raises the bar to policy changes somewhat and reduces the …
Although the Reserve Bank of Australia’s meeting on Tuesday 4th April won’t be very exciting, as the RBA will leave interest rates at 1.5% for the sixth meeting in a row, events over the next month could make May’s meeting much more interesting. By then …
In light of the Reserve Bank of India (RBI) signalling the end of the loosening cycle in its most recent policy meeting in February, most analysts are now expecting the central bank to keep rates on prolonged hold, including in next week’s announcement. …
The Bank of Ghana’s sharp rate cut suggests that policy loosening will be more aggressive than we’d previously thought. We’ve revised down our end of year rate forecast from 20.00% to 18.00%. The Central Bank of Kenya left rates on hold, but policy will …
27th March 2017
Underlying Swedish inflation is set to pick up further and means that the Riksbank’s ultra-loose policy is no longer justified. Conversely, the outlook for Norwegian inflation calls for an interest rate cut. Economic surveys for the largest two Nordic …
24th March 2017
Having cut the one-week repo rate by 25bp earlier in the day, Russia’s central bank governor, Elvira Nabiullina, used her post-meeting press conference to stress that further monetary easing will be gradual. While this suggests that interest rate cuts are …
Struggles to push through much-needed tax reform in the Philippines are the first sign that President Duterte’s controversial war on drugs and offensive behaviour is undermining the efforts of his administration to reform the economy. … Duterte …
Today’s 25bp rate hike by the Central Bank of Sri Lanka (CBSL) is unlikely to be the last in the current tightening cycle. A combination of rapid credit growth, rising inflation and a weakening currency mean rates are likely to be raised by a further 75bp …
The recent dip in oil prices has raised concerns in some quarters that the Saudi authorities may devalue the riyal, but we find this highly unlikely. Indeed, the probability that the dollar peg will be abandoned is lower now than at any time since fears …
23rd March 2017
Despite higher UK inflation and solid growth, there are good reasons why the MPC will not quickly follow the US Fed in tightening monetary policy. … Why won’t the MPC soon follow the …
The decision by Taiwan’s central bank (CBC) to keep its policy rate on hold today at 1.375% came as no surprise given the recent rebound in the economy. With inflationary pressures still very weak, we expect the central bank will keep rates low for some …
Today’s decision by the central bank in the Philippines (BSP) to keep its main policy rate on hold at 3.0% had been widely expected. Looking ahead, while a growing number of analysts are predicting that the BSP will have to hike rates soon, we continue to …
The jump in inflation across much of Emerging Europe last month has shifted the focus onto policy tightening. But in most cases this has been a one-off rise from higher fuel inflation, and there is little evidence that a policy response is imminent. While …
The latest economic data for India suggest that the most acute impact from the government’s demonetisation measures has now passed. Both the manufacturing and services PMI readings for February came in above 50 for the first time since the demonetisation …
The Reserve Bank of New Zealand used today’s decision to leave interest rates at 1.75% to emphasise once again that rates won’t be raised either this year or next. The financial markets are slowly getting the message, but there is still plenty of scope …
22nd March 2017
Today’s MPC statement suggested that policymakers are – at the very least – considering a shift towards tightening monetary conditions. The communication was, as ever, a bit unclear. We do not expect a meaningful shift in policy anytime soon. … Nigeria: …
21st March 2017
Political campaigning in South Korea ahead of presidential elections due on 9th May is now well underway. Given the extent of public anger against ousted former president Park Geun-hye and her ruling party, the next president is likely to come from one of …
February’s CPI figures have increased the chances of an earlier interest rate hike than markets have been expecting. Meanwhile, the fall in public borrowing was in line with the OBR’s new downwardly-revised forecasts. … Consumer Prices & Public Finances …
The impending exit of two hawks from the Bank of Japan’s Policy Board suggests that calls for the Bank to scale back policy support will diminish. The Bank is likely to reduce the volume of its asset purchases whoever takes their place, but the shift in …
In the week Article 50 received Royal Assent, sterling halted its latest decline despite renewed calls for a second Scottish independence referendum. While the referendum announcement coincided with a change in fortunes for sterling, the far more …
17th March 2017
The Fed’s decision to hike interest rates by 25bp last week may initially seem a little hard to square with the apparent weakening in the economic data since the start of the year, with the Atlanta Fed’s first-quarter GDP tracker having fallen below 1% …
The Fed’s decision to raise interest rates this week has created ripples rather than waves among EM central banks. Policymakers in China and Turkey followed by tightening policy too, but this was as much to tackle domestic problems as it was to address …
While it came as no surprise that the US Federal Reserve pressed ahead and raised interest rates last week, markets were given a jolt by an unexpected split on the UK Monetary Policy Committee, with one member voting for an immediate hike and others …
Ahead of this month’s Fed and MPC interest rate setting meetings, the narrative had been one of markets preparing for a historic divergence in monetary policy between the US and UK. Sterling had been on a renewed leg down against the dollar and US …
