Filtered by Topic: Monetary Policy Use setting Monetary Policy
The movements in housebuilder share prices in the past two weeks could be a sign that a slump in house price expectations is about to trigger a fresh house price correction. But if we are right, and the economy avoids a recession and a sharp rise in …
12th July 2016
Planned changes by the National Bank of Hungary to its benchmark three-month deposit facility announced this afternoon could act to loosen monetary conditions, although in practice they seem unlikely to have a particularly large impact. … Hungary revamps …
We remain cautiously optimistic about the outlook for Japanese equities. However, this is based on the assumption that ‘conventional’ QE will drag the yen lower again, rather than the financing of additional fiscal stimulus by ‘helicopter money’. … Is …
Indian consumer price inflation held steady in June, but it remains some way above the RBI's target for March 2017. As such, the scope for further monetary loosening still looks very limited. … Consumer Prices (Jun.) & Industrial Production …
We think that Indian consumer price inflation dropped in June, but it is likely to have remained some way above the Reserve Bank’s 5.0% target for March 2017. There is little reason to think that further rate cuts are imminent. … Inflation to slow but …
Swedish inflation hit a four-year high in June, but it is still low. So although domestic price pressures are rising, the Riksbank may still have to take further policy action. … Swedish Consumer Prices …
The Riksbank minutes confirm a readiness to act if conditions deteriorate in the wake of the UK’s Brexit vote. But there are signs of diminishing appetite for further measures from some members. … Swedish Consumer Prices (June …
The Bank of England’s Monetary Policy Committee (MPC) is likely to look through the inflationary consequences of the drop in the pound seen since the Brexit vote and focus instead on cushioning the impact on the economy. … How will policymakers respond to …
11th July 2016
The Russian economy is through the acute phase of its crisis and a recovery should begin over the coming quarters. However, it will be extremely weak. We expect the economy to stagnate over 2016 as a whole and grow by just 1.5% in 2017. Inflation and …
The latest Bank of Canada surveys support our view that falling business investment, particularly in the oil and gas sector, will weigh on the economy in the second half of the year. Making matters worse, non-energy exports have barely risen at all in …
8th July 2016
The latest evidence suggests that GDP growth accelerated to around 3% annualised in the secondquarter. Furthermore, the rebound in both of the June ISM surveys suggests that this strengtheningin activity is set to continue. While we are doubtful that the …
This report is only available as a PDF. Click to download. … Doves rule the roost despite strong US payrolls …
The 700 decline in employment in June was below consensus expectations of a 5,000gain, in part because of a fall back in the number of public administration workers asthe majority of temporary census-related hires in May were no longer working inJune. …
The headlines this week have concentrated on the negative impact that Brexit has had on sterling and confidence, as well as the temporary suspension of trading in a number of commercial property funds. But support for the economy appears to be on its way, …
There is no easy solution to the euro-zone’s banking problems, but the risks of doing nothing are too large for policymakers to simply sit on their hands. We think that policymakers will find a way to support the banks. And the forthcoming ECB stress test …
The drop in Brazil inflation, from 9.3% in May to 8.9% in June, should be followed by further falls over the coming months. That said, our view remains that the central bank will resist lowering interest rates until Q4 of this year. … Brazil & Chile …
Taiwan’s central bank is running out of good options as it looks to boost an economy which has struggled badly over the past year. We see little prospect of a decent recovery in the coming quarters. … What options does Taiwan’s central bank have …
Looser fiscal policy is likely to support an acceleration in economic growth next year but it will fizzle out again in 2018 leaving ample amounts of spare capacity and little in the way of inflationary pressure. By that point though, the Bank of Japan …
The relatively calm market reaction to the EU referendum might suggest that there is no urgency for the Monetary Policy Committee (MPC) to deliver additional policy stimulus at its policy meeting on July 14 th . But we think the Committee will recognise …
7th July 2016
The modest fall in Mexico’s headline inflation rate in June, to 2.5% y/y from 2.6% y/y in May, hides the fact that core inflation pressures are creeping up. Coupled with continued pressure on the peso, this means further interest rate hikes are still …
We expect inflation in Brazil to fall back over the next year but, despite a recent repricing, the centralbank may still not cut interest rates as quickly as the markets expect. … Brazil inflation set to fall but interest rate cuts to be …
The latest data survey data suggest that growth slowed further in the second quarter, ahead of the referendum. Indeed, the Markit/CIPS composite PMI ended June at a level consistent with no quarterly growth in GDP. That being said, the official data have …
The surprise increase in the value of China’s foreign exchange reserves last month could be the result of the People’s Bank marking to market the value of some reserve assets at the end of June, in the midst of the post-Brexit vote financial volatility. …
EM growth is likely to accelerate over the second half of this year, but a downward shift in potential growth means the recovery could hit the buffers in 2017-18. … EM pick-up to prove …
Continued declines in the renminbi against both the dollar and the official trade-weighted basket make a mockery of the PBOC’s suggestion that its policy is to keep the currency’s value stable. Another upsurge of speculative pressure on the currency is …
6th July 2016
Despite an apparent return to below-potential GDP growth and the financial market turmoil triggered by the UK's decision to leave the EU, we expect the Bank of Canada to leave its policy rate unchanged at 0.5% at the upcoming meeting (Wednesday 13 th …
June’s survey data confirmed that GDP growth in Q2 is very unlikely to have matched Q1’s 0.6% quarterly expansion, with both the EC Survey and the PMI appearing consistent with around a 0.3% rise. Industrial production and retail sales data have supported …
The Polish MPC used this afternoon’s post-meeting press conference to suggest that it was broadly unconcerned about the impact of the UK’s vote to leave the EU on the domestic economy, but we think Brexit may cause growth to be a little weaker than the …
Sweden’s Riksbank has pushed back its expectations for a rate rise. Although the negative impact of previous falls in energy prices on inflation is fading and domestic inflationary pressures are picking up, the Riksbank might still need to intervene in …
The negative economic spillovers on Central and South Eastern Europe from the UK’s vote for Brexit are likely to be smaller than many fear, but they will still drag on activity in the region. Accordingly, we have made some modest downwards revisions to …
By leaving interest rates at 1.75% and not providing a very strong hint that they will be cut in August, the Reserve Bank of Australia today implied that the recent financial market volatility and political uncertainty has not altered the economic …
5th July 2016
Rumours have circulated again that Egypt is seeking a deal with the IMF and, as we argue in this Watch, an agreement is now looking more likely than at any point in the past five years. A financing package would help to plug the holes in Egypt’s balance …
Coming after Governor Carney’s initial statement following the referendum to “take all necessary steps to meet its responsibilities for monetary and financial stability”, Project Reassure continued with the FPC announcing immediate action to support bank …
While the UK Brexit vote triggered some initial volatility in financial markets, many of the adverse moves have already been unwound and overall financial conditions in the US remain considerably looser than they were just a few months ago. And with the …
1st July 2016
The past month has brought aggressive monetary easing in a handful of frontier markets, and we think others will follow suit over the rest of this year. Cuts in policy interest rates this month in Ukraine and Argentina, of 150bp and 450bp respectively, …
30th June 2016
With the economy struggling badly and inflationary pressures very low, Taiwan’s central bank (CBC) today cuts its discount rate by a further 12.5 basis points to 1.375%. Given the poor outlook for economic growth, further easing is likely before the end …
This year looks set to be the toughest for the economies of the Middle East and North Africa in almost three decades. The Gulf countries will continue to tighten fiscal policy in response to low oil prices. While this should ensure that dollar pegs remain …
29th June 2016
The markets are probably right to price in additional policy easing from the Bank of England and the ECB in the wake of the UK’s vote to leave the EU (‘Brexit’). However, the consensus is almost certainly wrong in expecting the Fed to respond by keeping …
In the immediate aftermath of the UK referendum, central bankers have concentrated on providing verbal reassurance, but they may soon back their words with action. We think the Bank of England will cut its key policy rate to only 0.25% in July or August …
If worries about a deepening crisis in the EU drive another surge of safe haven flows into Japan, even direct foreign exchange intervention would probably not prevent the yen from strengthening. Intervention could make a difference though if market …
The Korean government today announced plans for a fiscal stimulus package worth about 20trn won (equivalent to 1.3% of GDP) in response to growing headwinds facing the economy. The decision follows the Bank of Korea’s move to cut interest rates to a new …
28th June 2016
The latest monetary data are consistent with a gradual slowdown in advanced economies, but do not point to a collapse in growth. Looking ahead, global central banks are likely to respond to the UK referendum result by leaving policy looser for even …
27th June 2016
Despite the slowdown in the first quarter, the incoming monthly data point to a big rebound in second-quarter GDP growth and we still expect growth for 2016 as a whole to be 2.0%. The UK’s vote to leave the EU will have no meaningful impact on the US …
Despite unexpected gains for the right in Spain, an anti-austerity left-wing coalition may now be more likely than opinion polls had suggested. Either way, the new government will be a very fragile one. … Spain’s new government set to be a fragile …
May’s euro-zone monetary data suggest that economic growth remains fairly slow. While the ECB has since introduced new stimulus measures, including its latest TLTROs, we doubt that they will boost money and lending growth significantly. … Euro-zone …
Following the announcement earlier this month from Reserve Bank of India (RBI) Governor Raghuram Rajan that he will be stepping down at the end of his first term in September, speculation has been rife over who will succeed him. In this Watch , we profile …
The growth rate of average hourly earnings has accelerated to 2.5%, from a norm of nearer 2.0% in recent years, and other measures like the Atlanta Fed’s tracker suggest that median wage growth is closer to 3.5% now. It is not all good news, however, with …
24th June 2016
The UK vote to leave the European Union (EU) has inevitably triggered an immediate negative reaction in global financial markets, but we do not anticipate a significant sustained tightening in US financial conditions. As a result, we don’t expect the UK …
With its currency flat today amid broader EM volatility and its governor on the way out, the central bank in Sri Lanka (CBSL) has decided to keep policy rates unchanged. But credit growth is soaring and price pressures are building. We expect rate hikes …
