Filtered by Topic: Monetary Policy Use setting Monetary Policy
The surprise removal of Finance Minister Nhlanhla Nene is a very worrying development. Mr. Nene was a rare advocate of fiscal discipline, and his sacking adds to a string of increasingly autocratic decisions by President Jacob Zuma . Further debt …
10th December 2015
The sharp pick-up in Turkish GDP growth in Q3, to 5.4% y/y, may help to alleviate some of the political pressure on the central bank to keep policy loose. This reinforces our view that the central bank will raise interest rates at this month’s MPC …
With the ECB’s cautious action last week reducing upward pressure on the franc against the euro, the Swiss National Bank (SNB) was able to leave policy on hold as expected today. But we still think that the ECB will expand its QE programme next year and …
With the domestic economy on the mend, the Bank of Korea (BoK) left its policy rate unchanged at a record low of 1.50% today. We expect the BoK to keep rates at their current lows throughout 2016. … Bank of Korea to keep rates on pause through …
After cutting interest rates today from 2.75% back to the record low of 2.50% seen during the Global Financial Crisis, the Reserve Bank of New Zealand sent a strong signal that it doesn’t think rates need to fall further. We think it will be proved wrong, …
November’s consumer prices data showed a continued divergence between the subdued rates of inflation in Sweden and Denmark and stronger price pressures in Norway, reflecting the recent depreciation of its currency. … Swedish, Danish & Norwegian Consumer …
The EM world looks to have grown by its weakest pace since the global financial crisis in 2015, but things should start to improve next year. In this Focus we outline the ten key issues that we think will shape the outlook for EM investors in 2016. … Ten …
9th December 2015
The recent further fall in oil prices and imminent commencement of monetary tightening in the US are unlikely to compensate for the ECB’s disappointingly timid action at last week’s policy meeting. … Will the Fed & oil prices bail out the …
It now looks odds on that the US Federal Reserve presses ahead and raises interest rates next week, while on the other side of the English Channel, the ECB has already loosened policy further. The UK lies somewhere in between, with the next move in …
At next week’s FOMC meeting, which concludes on 16 th December, the Fed is now almost universally expected to raise the fed funds rate by 25 basis points, to a range of between 0.25% and 0.50%. In the accompanying statement the Fed will stress again that …
Today’s decision by Iceland’s central bank to keep its key interest rates unchanged was merely a reflection of the improvement in the short-term inflation outlook and a tighter policy stance will still be required next year. … Iceland holds rates but more …
One factor that has supported growth in Central and Eastern Europe this year is a rise in EU structural funding, but this looks set to ease in 2016. As we explain in this Watch , while this will reduce one prop to investment, we don’t expect it to …
We do not think that higher US interest rates will derail the global recovery next year. The Fed is only likely to tighten policy if the economy continues to do well. Other major central banks will also be in no hurry to follow, meaning that global …
The euro-zone has proved relatively resilient in the face of global headwinds, but the region still has to contend with significant domestic problems. And with fiscal policy unlikely to provide a big boost to growth, the onus will remain firmly on the ECB …
8th December 2015
Although we expect GDP growth to be a moderate 2.5% next year, the big surprise will be how quickly inflation rebounds. With domestic price pressures mounting and this year’s deflationary shocks from lower commodity prices and the stronger dollar set to …
The solid growth in Iceland’s GDP in Q3 confirmed that the economy is performing strongly and has put the 2008 collapse of the banking sector behind it. With domestic demand very healthy, the central bank is unlikely to be deterred from hiking rates. … …
The further fall in Chilean inflation in November is an encouraging sign that price pressures in the economy are easing. While this reduces the likelihood of the central bank hiking interest rates later this month, inflation will remain high and a gradual …
7th December 2015
Today’s data suggest that capital outflows picked up sharply last month, leading the People’s Bank to resume selling FX in order to prop up the value of the renminbi. … FX reserves …
The RBI is expressing a high degree of faith in the finance ministry’s ability to offset a rising public sector wage bill by boosting tax revenues or trimming other forms of current spending. We fear this faith is misplaced and that public investment will …
Last week Chair Janet Yellen all but confirmed that the Fed will begin to raise interest rates from near-zero at the upcoming FOMC meeting, which ends on 16 th December. Any final doubts should have been erased by the news that employment increased by a …
4th December 2015
There was much talk about the emerging “transatlantic divergence” last week. It now looks odds on that the US Fed will press ahead and raise interest rates later this month. Meanwhile, on the other side of the English Channel, the European Central Bank …
The 211,000 gain in November's non-farm payrolls, along with the 35,000 upward revision to the gains in the preceding two months, would appear to seal an interest rate hike at the Fed's upcoming FOMC meeting, which concludes on the 16 th December. … …
The ECB’s failure to live up to its own hype at December’s Governing Council meeting looks likely to have at least some negative consequences, both on the economic outlook via the market response and on its own ability to influence markets verbally in the …
The UK economy appears to be regaining a little momentum, but the nature of the recovery is looking quite unbalanced. The breakdown of Q3’s 0.5% quarterly rise in real GDP showed solid growth in domestic demand, but a 1.5 percentage point drag from net …
3rd December 2015
And so another year of rock bottom interest rates is set to pass us by. It is getting on for seven years since interest rates reached 0.5% and it is over eight years since we saw an interest rate rise. So will 2016 be the year in which rates finally rise? …
The European Central Bank’s failure to meet the expectations for further policy loosening fuelled by its own dovish signals has dented both its reputation for communication and, more importantly, the outlook for the euro-zone economy. … ECB fails to live …
The jump in Turkish inflation to a much higher than expected 8.1% y/y in November reinforces our view that the central bank will be forced to hike interest rates over the coming months. … Turkey CPI …
The Reserve Bank of New Zealand will probably cut interest rates by 0.25%, from 2.75% to 2.50%, at the policy meeting on Thursday 10th December. What’s more, and despite the release of some positive economic news since the Board last met, we believe that …
The Bank of Canada’s decision to leave its policy rate at 0.50% today was as expected given that the economy returned to positive growth in the third quarter. Although it believes economic growth will accelerate next year and is neutral on the interest …
2nd December 2015
While monetary policy looks set to start moving in opposite directions in the US and euro-zone very soon, no change looks likely in the UK in the near future. Sterling is therefore likely to be caught in the crossfire, keeping the trade-weighted index …
An expansion of the QE programme tomorrow would probably require some changes to ECB rules. But we do not think that this will be enough to deter the Bank from implementing more stimulus. … Current QE rules won’t stop the …
Having contracted in 2015, we expect the economy of Emerging Europe to return to growth in 2016. This will be driven in large part by an improvement in conditions in the region’s largest economy, Russia, which should exit recession over the coming …
1st December 2015
We got close to finally seeing some action from the Bank of England today. But in the event, the latest Financial Stability Report only prepped the ground for action from the Financial Policy Committee (FPC) further ahead. What’s more, it’s clear that the …
The Reserve Bank of India (RBI) kept its repo rate on hold at 6.75% today and, rather than just being on pause, we maintain our view that the loosening cycle is now at an end. … RBI holds rates, loosening cycle now at an …
The Swiss GDP release revealed that growth stalled in Q3 and November’s manufacturing PMI points to worse to come. This raises the likelihood that the Swiss National Bank (SNB) will increase its policy support in the coming months. … Swiss GDP (Q3 …
The broad money supply is growing steadily and the growth of credit to nonfinancial companies has been recovering in recent months. With bond yields still very low and several central banks likely to loosen policy over the coming year, monetary conditions …
30th November 2015
The smaller-than-expected 25bp hike in Colombia’s benchmark interest rate, to 5.50%, suggests that policymakers are starting to worry about the impact of tighter monetary policy on the economy. But, with inflation likely to continue rising over the coming …
The evidence suggests that the economy stumbled at the end of the third quarter, casting doubt about its capacity to survive the worsening oil price collapse. With non-exports misfiring and business confidence and investment tepid, we wouldn’t bet on any …
27th November 2015
For all the talk of a sharp slowdown in Asia, regional growth remains remarkably stable. That said, there are still no signs of recovery, with exports again acting as a drag on growth in the third quarter, and consumers still unwilling to spend their …
We could finally see some policy action from the Bank of England next week – but not in the form of a tightening in monetary policy. The Financial Policy Committee (FPC) may flex its muscle by using some of its macroprudential tools to keep a check on the …
Even though the recent comment by the Reserve Bank of Australia Governor that everyone should “chill out” was clearly said in jest, it looks a little misplaced when we have since found out that capital expenditure is falling off a cliff. The absence of …
The question is not whether the ECB’s Governing Council will loosen monetary policy at its meeting on December 3rd, but rather whether it will do so decisively enough to meet the very strong expectations stoked up by its own dovish signals. Anything less …
26th November 2015
The latest comments from Chairman Thomas Jordan suggest that the Swiss National Bank will act decisively to limit franc strength, including through further direct intervention in FX markets. But we doubt that it will be able to prevent some appreciation …
After many delays we think the US Fed will – finally – raise rates in December. However, the global easing cycle is likely to continue next year,for several reasons. Underlying inflation in Japan and much of Europe is set to stay well below central bank …
The raft of preliminary GDP data published over the past month showed that the slump in regional growth bottomed out in the third quarter of this year. We estimate that, in aggregate, GDP in Emerging Europe contracted by 0.5% y/y, a better outturn than …
The fact that Japan’s main trade union federation says that it will not demand stronger pay hikes in the upcoming wage negotiations than it did last time around provides another reason to think that the Bank of Japan will struggle to lift inflation. We …
US high-yield corporate bonds have performed poorly in November amid concerns over the renewed fall in commodity prices and the prospect of tighter US monetary policy. Looking ahead, we do not think that this performance will continue, even if the Fed …
25th November 2015
