Filtered by Topic: Monetary Policy Use setting Monetary Policy
Indian wholesale price inflation rose for the seventh consecutive month in August, and is set to accelerate further over the near term. This supports our view that there is little scope for further monetary loosening. … Wholesale Prices …
14th September 2016
The Reserve Banks of Australia and New Zealand are likely to ignore suggestions that they should lower their inflation targets since that would drive inflation even lower. Targeting nominal GDP growth instead isn’t much more appealing either, partly as it …
As euro-zone inflation picks up over the coming months, short-term inflation expectations should rise.But long-term expectations are less responsive to movements in current inflation and are likely toremain very low. We think that the ECB will eventually …
13th September 2016
August’s stable CPI inflation rate is a temporary pause in an upward trend that should see it rise above the MPC’s target next year. But prospect of above-target inflation probably won’t stop the Committee from easing monetary policy further. … Consumer …
Despite weaker-than-expected Swedish inflation in August, price pressures are set to increase in the coming months. And as higher inflation feeds through to inflation expectations, the Riksbank will need to start to thinking about tightening policy. … …
We have warned for some time that emerging market (EM) equities will be more volatile as attention turns back to the Fed. Momentum may yet drive stocks lower in the near term, but we continue to expect EM equities to perform reasonably well in the next …
12th September 2016
The sudden sell-off in EMs that started on Friday, triggered by hawkish comments from the head of the Boston Fed Eric Rosengreen, points to a turbulent period ahead for EM financial markets as the next Fed rate hike draws closer. But economic …
Yet another scaling back of investors’ expectations about Fed policy has breathed new life into the rally in emerging market (EM) “junk” bonds. But we suspect that the best days are now behind them, and would not be surprised to see the recent rally go …
9th September 2016
August’s inflation data are not going to provide any reassurance to Brazilian policymakers that now is the time to begin lowering interest rates. The headline inflation rate rose to a three-month high, led by a further increase in food and transport …
The resilience of the recent data has prompted some commentators to question whether the MPC was wrong to cut Bank Rate to 0.25% and announce new gilt purchases of £60bn and corporate bond purchases of £10bn in August. But monetary policy loosening was …
Russia’s Central Bank has put increasing emphasis on the importance of inflation expectations in making monetary policy decisions, but it seems that these tend to be a lagging, rather than a leading indicator of actual inflation. Accordingly, we think …
With the economy showing some signs of improvement, the Bank of Korea (BoK) unsurprisingly kept its policy rate unchanged at 1.25% today. While benign inflation will give the BoK scope to keep rates low, concerns about high household debt are likely to …
President Draghi suggested today that a dramatic increase in ECB policy support is not imminent. But we still expect the Bank to extend its QE programme by six months to next September and it may yet have to increase the pace of its assets purchases next …
8th September 2016
The rebound in some activity data over the past month has led some to question whether the MPC jumped the gun with its bold package of measures in August. However, the loosening was no doubt one of the factors contributing towards the improvement in …
Negative interest rates have succeeded in lowering bond yields and bank lending rates in Japan without undermining lenders’ willingness to provide credit. However, credit growth has nonetheless continued to slow, and the measure has arguably contributed …
With global growth still lacklustre, monetary policy seemingly ineffective and government bond yields unprecedentedly low, the case for fiscal stimulus has become more compelling. Partly as a result, we now expect advanced economies overall to benefit …
7th September 2016
The Bank of Canada issued a relatively dovish statement today, warning that “risks to the profile for inflation have tilted somewhat to the downside since July”. … Bank of Canada opens door to rate …
With the Riksbank on hold, rising inflation means that real interest rates in Sweden are set to dropto a 40-year low. Such an accommodative stance seems unnecessary given the sound economic outlook and we suspect that the Bank will raise interest rates …
Following its move to cut rates in response to rising downside risks to growth at its last meeting in July, Malaysia’s central bank (BNM) today left its policy rate unchanged at 3.0%. With growth still on track to meet BNM’s forecast of 4.0-4.5% in 2016 …
With the Riksbank on hold, rising inflation means that real interest rates in Sweden are set to drop to a 40-year low. Such an accommodative stance seems unnecessary given the sound economic outlook and we suspect that the Bank will raise interest rates …
The unexpected slump in the ISM non-manufacturing index to a six-year low of 51.4 in August, from 55.5, should all but rule out any possibility of a September rate hike, particularly as the manufacturing index fell back below the 50 mark last month. … …
6th September 2016
The latest surveys suggest that the UK economy has slowed but not slumped following the EU referendum, while growth in the world as a whole has remained sluggish. The US economy looks set to pick up a bit after a very weak first half of the year while …
The policy statement released alongside the Reserve Bank of Australia’s decision to leave interest rates at 1.5% today provides no hint that another rate cut is around the corner. If the inflation data for the third quarter are very weak, the RBA’s hand …
Rapid economic growth, surging imports and strong credit growth have fuelled fears that the Philippines is overheating and that the central bank will be soon be forced to hike interest rates to bring the economy under control. We think such fears are …
5th September 2016
The fall in Russian inflation to 6.9% y/y in August, coming alongside last month’s drop in household inflation expectations, reinforces our view that the central bank will resume its easing cycle later this month. We expect the benchmark one-week repo …
CPI inflation data for August are likely to show that the headline rate eased a touch, but remained some way above the Reserve Bank’s 5.0% target for March 2017. With the new governor, Dr Urjit Patel, unlikely to alter this target or the target of 4±2% …
The Bank of Canada is unlikely to take any action at the upcoming policy meeting this Wednesday. The 1.6% annualised decline in second-quarter GDP was worse than the 1.0% fall the Bank assumed in its July Monetary Policy Report. But Statistics Canada …
2nd September 2016
The August employment report is not going to convince Fed officials to vote for a rate hike later this month, although an increase in December is still likely. … Employment Report (Aug.) & Int. Trade …
Euro-zone equity prices have risen so far in Q3, painting a more optimistic picture of the economy’s performance than the consumer and business surveys. However, there are two reasons why we think that the surveys, which suggest that growth might have …
The outbreak of the Zika virus in Singapore has dominated local headlines, but while it is an important public health issue the economic impact will be limited. … How big a threat is Zika to …
Without a crisis to concentrate minds, G20 leaders meeting in Hangzhou are unlikely to make any major policy breakthroughs. The truth is that there is little appetite for coordinated policy action, despite all the fine words to the contrary. That said, we …
A number of voices have begun loosely using the term “liquidity trap” to argue that stronger credit growth in China has failed to provide a greater boost to output because firms are hoarding cash rather than spending it. But the money supply data being …
Auction clearance rates are a timely and useful barometer of housing activity, but since they capture less than a third of all sales they don’t provide a full picture. While Australia’s housing market does appear to have strengthened in recent months, …
The appointment of Dr Urjit Patel as the new governor of the Reserve Bank of India (RBI) gives a strong indication of policy continuity at the central bank, and strengthens our view that the easing cycle that began last year is now over. … How to think …
Recent news on the economy has reduced the pressure on the European Central Bank (ECB) to provide further policy stimulus at its forthcoming policy meeting on 8th September. But the weakness of price pressures in the region could still prompt the …
1st September 2016
Policymakers gathering in Jackson Hole last week highlighted that a fall in equilibrium real interest rates means that central banks may have little room to cut rates in the event of another recession. Unconventional policies such as QE and forward …
The Bank of Canada is unlikely to take any action at the upcoming policy meeting on 7th September. The 1.6% annualised decline in second-quarter GDP was worse than the 1.0% fall the Bank assumed in its July Monetary Policy Report. But Statistics Canada …
A number of commentators have recently drawn attention to a rapid rise in lending by the People’s Bank to domestic banks and suggested that this represents a form of stealth credit expansion or, alternatively, “backdoor QE”. In fact, it signals not a turn …
Asian financial markets generally shrugged off last Friday’s comments from US Fed Chair Janet Yellen, in which she suggested the likelihood of an early rate hike in the US has increased. … Asian markets calm following Yellen’s …
31st August 2016
The hit to Norway’s GDP growth from lower oil prices appears to be fading. Nevertheless, with growth still fairly slow and inflation set to fall sharply, we still expect the Norges Bank to loosen monetary policy this year. … Norwegian GDP …
Official data released over the past month mostly suggested that African economies improved a touch, but a series of political shocks has hit investor confidence. The most high-profile of these as been the latest dispute between South African President …
30th August 2016
The central bank in Sri Lanka (CBSL) today left interest rates on hold despite a continued acceleration in credit growth, high inflation and a weak currency. We think another interest rate hike is only amatter of time. … Sri Lanka holds rates, but further …
August’s euro-zone Business and Consumer Survey suggests that growth has slowed and inflation expectations are weak. So the ECB will be under pressure to loosen monetary policy further at its meeting next week. … EC Business & Consumer Survey …
Glenn Stevens is unlikely to end his decade as Governor of the Reserve Bank of Australia with a bang, as interest rates will almost certainly be left at 1.5% at his last policy meeting on Tuesday 6th September. And while the RBA doesn’t appear to be in a …
Hawkish comments by some Fed officials and a slight strengthening of the US dollar ahead of Janet Yellen’s speech at Jackson Hole on Friday weighed on the prices of most commodities over the past week. However, while the Fed Chair added her voice to those …
26th August 2016
This week’s Jackson Hole conference is unlikely to shine much light on the immediate outlook formonetary policy either in the US or elsewhere. But it will underline how concerned many centralbankers are that they have little firepower left to respond to …
July’s money and credit data show a pick-up in lending growth, despite concerns about banks’ health and the UK’s vote for Brexit. Nevertheless, the data suggest that inflation will remain weak. … Euro-zone Monetary Indicators Monitor …
Economic growth across Emerging Asia accelerated last quarter, as strong domestic demand compensated for weak exports. But while this “decoupling” has enabled Emerging Asia to shrug-off the weakness in global demand, it has come at a cost. Private sector …
Our econometric model suggests that non-farm payrolls increased by a more sustainable 180,000 in August. Otherwise, we suspect that after remaining unchanged in recent months, the unemployment rate edged down to 4.8%, from 4.9%. … Gradual slowdown in pace …
25th August 2016
