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Filtered by Topic: Monetary Policy Use setting Monetary Policy
Disruption from China’s reopening is fading faster than we had expected and we have revised up our forecast for growth there from 2.0% to 5.5%. This means that global GDP growth will be stronger than we had expected this year and energy inflation will …
12th January 2023
The Bank of Korea is likely to implement one final 25bp hike (01.00 GMT) Chinese trade data will probably show falls in both imports and exports in December We think UK GDP fell by 0.3% m/m in November (07.00 GMT) Key Market Themes The latest evidence …
The Norges Bank is one step from ending its tightening cycle. We expect it to raise its policy rate by 25bp next week, to a peak of 3%. After that it is likely to pause while it waits to assess the full effects of the cumulative 300bp of tightening that …
Another more muted gain in core CPI Core CPI inflation was still an elevated 5.7% in December but, with another more muted 0.3% m/m gain, the three-month annualised rate fell to a 20-month low of 3.1%. Admittedly, the latter is still slightly above the …
Has the EGP gone too far once again? The Egyptian pound has pared back its losses after sharp falls against the dollar on Wednesday in a sign that, just like 2016, the currency may have overshot. The authorities may keep the pound weak in a bid to rebuild …
In the first instalment of our Election Watch series ahead of the late-February polls in Nigeria, we assess the economic policies proposed by key candidates. The elections offer a chance to depart from unorthodox policymaking under the outgoing …
Speculation is mounting that the Bank of Japan is finally moving to end its yield curve control (YCC) regime following December’s surprise policy tweak. How likely is the Bank to take this step, what would it mean for its monetary policy, and what impact …
11th January 2023
Widening of tolerance band has done little to improve market functioning Nomination of less dovish Governor would signal Yield Curve Control is on its way out However, renewed slowdown in inflation will prevent policy rate hikes The widening of the …
NBR’s slows tightening again, likely the end of the cycle The 25bp interest rate hike by Romania’s central bank today, to 7.00%, probably brings the hiking cycle to an end. Today’s decision was expected by all analysts, including ourselves. The central …
10th January 2023
There has been a further slight improvement in prospects for the euro-zone in recent weeks. Business surveys suggest that activity is no longer contracting sharply, headline inflation seems to be past its peak, and wholesale gas prices have plunged. …
This report has been updated with additional table and chart of key data. Inflation surges higher on back of weaker pound Egypt’s CPI inflation rate jumped from 18.7% y/y in November to 21.3% y/y in December, its fastest pace since the end of 2017. (See …
Strong core inflation to prompt one final Norges Bank hike The continued strength of core inflation will encourage the Norges Bank to press on with another 25bp interest rate increase next week. While there is still some more upside risk to underlying …
In less than two months, we should know who will replace Bank of Japan Governor Kuroda Haruhiko, whose term ends on 8 th April. Whoever replaces him will be under increasing pressure from the government to abandon Yield Curve Control (YCC), which has an …
9th January 2023
The resilience of the labour market is a risk to our view that the Bank of Canada will pause its tightening cycle after a final 25 bp hike this month, even as the slump in natural gas prices raises the chance that CPI inflation will fall faster than the …
6th January 2023
Sub-Saharan Africa’s grim year ahead Last year ended with the bang of Ghana’s sovereign default , and 2023 has started with economies bracing for disruptions due to the end of zero-COVID in China and a looming global recession. While these are likely to …
The past few weeks have brought the news that the UK economy is lagging even further behind its G7 counterparts. (See here .) One reason for this relative underperformance is real business investment, which accounts for 9.5% of real GDP and in Q3 was …
While we think the hawkish ECB poses a near-term threat to euro-zone government bonds, we still expect their yields to be lower, in general, by the end of this year . Having climbed throughout December, developed market government bond yields have …
After November’s positive surprise, will December’s CPI report provide more evidence that US inflationary pressures are easing – and what would that mean for the Fed’s policy calculus? Chief US Economist Paul Ashworth and Senior US Economist Andrew …
The 0.3% q/q contraction in Q3 left real GDP 0.8% below its Q4 2019 pre-virus level and the UK economy lagging even further behind its major counterparts. In contrast, GDP has risen above its pre-pandemic level in all G7 economies, including the US …
5th January 2023
December FOMC minutes may reveal impact of softer CPI prints on Fed thinking (19.00 GMT) We think the US trade balance narrowed dramatically in November (13.30 GMT) Sign up for our Drop In on the outlook for global inflation here Key Market Themes …
4th January 2023
Rates on hold, but cuts still some way off Poland’s central bank (NBP) left interest rates unchanged at 6.75% again today. We expect the next move by the NBP will be an interest rate cut , although that is only likely to arrive towards the end of 2023. …
The nomination of a less dovish candidate to succeed BoJ Governor Kuroda would probably signal that Yield Curve Control will soon be abandoned, though we would still expect the Bank to keep its short-term policy rate at -0.1%. This would result in a …
Higher interest rates continue to weigh on the economy November’s money and credit figures showed further signs that higher interest rates are dampening activity, particularly in the housing market. This will be a constant theme over the year ahead, …
Fall in headline rate but core rate rises Headline inflation in Switzerland fell in December but the rise in the core rate will be a concern for SNB policymakers. We still think that the Bank will raise rates by just 25bp in March, compared to the 50bp …
It is three years since a cluster of cases of severe pneumonia started to draw attention in Wuhan. Chart 1 maps economic developments in China since then. The blue bars show cumulative growth since the end of 2019 and the black outlines show growth over …
Economists from our Global Economics service held a special discussion about the trajectory of inflation across advanced and emerging economies in 2023. During this 20-minute briefing, the team addressed key issues from their latest Global Inflation Watch …
3rd January 2023
A year to write home about 2022 was in many ways a memorable year for Latin America. With Argentina’s World Cup victory the trophy returned to Latin America for the first time in 20 years. And it’s been a good year off the pitch too. GDP growth has …
23rd December 2022
Will policy loosening come onto the agenda? A s we explained in our Outlook for Q1 2023 , the hiking cycle that has dominated the discourse for much of 2022 is likely to come to an end early next year. The question then is, when will thoughts turn to …
CBE acts aggressively to counter inflation surge and weaker pound The 300bp interest rate hike by the Egyptian Central Bank (CBE), which took the overnight deposit rate to 16.25%, suggests that policymakers are even more concerned about rising inflation …
22nd December 2022
We expect US data to show weak economic momentum in November (13.30 GMT) Clients can read our World In 2023 reports here … …and register for the related Drop-In sessions, in early January, on the same page The next edition of the Capital Daily will be …
Jump in money supply won’t worry the SNB Swiss money supply data for November, released earlier this week, showed that M3 increased at its fastest year-on-year pace since February. (See Chart 1.) This could, at least in theory, encourage policymakers to …
We think investors are still too optimistic on global growth, and that “risky” assets will struggle over the first half of 2023 as a result. Investors seem increasingly to have come around to our view on inflation over the past couple of months, namely …
CBRT on hold … for now Turkey’s central bank (CBRT) stuck to its previous guidance today and left its policy rate on hold, at 9.00%, but there is clearly a risk that President Erdogan forces the CBRT to restart its easing cycle, particularly with the 2023 …
Bank Indonesia (BI) today raised interest rates for a fifth consecutive meeting, but slowed the pace of tightening with a 25bp hike (to 5.50%). With inflation still well above target, the central bank has more work to do. But provided the currency …
Bank Indonesia slows pace of tightening, but further hikes are likely Bank Indonesia (BI) today raised interest rates for a fifth consecutive meeting but slowed the pace of tightening by raising interest rates by just 25bps (to 5.50%) from 50bp at its …
Even though we expect the Bank of England to raise interest rates further from 3.50% now to a peak of 4.50%, we doubt the recent increase in gilt yields will be sustained. Instead, we think yields may fall from 3.60% currently to 2.75% by the end of 2023 …
21st December 2022
The November CPI report marked the second successive undershoot in inflation and there is mounting evidence that it will continue to fall sharply in 2023. (See Chart 1.) Core goods prices are coming under broad-based downward pressure, as easing supply …
The renewed rise in the three-month annualised rates of CPI-trim and CPI-median inflation in November call into question the idea that the Bank of Canada has already finished its tightening cycle. Those rates are not published by either Stats Can or the …
Rate cuts to arrive in mid-2023 The Czech National Bank (CNB) left its policy rate on hold, at 7.00%, as expected again today and, with inflation set to drop sharply from Q1, we think the CNB will be one of the first EM central banks to cut rates next …
Tightening cycles have been a key feature of 2022 across the emerging world, but the end is in sight as we enter 2023. Some EM central banks that began tightening early – for example Brazil, Chile and Czech Republic – have already brought an end to …
The jump in bond yields and the further strengthening of the yen following the widening of the Bank of Japan’s tolerance band for 10-year JGB yields will lower the value of assets owned by Japanese investors. Insurance firms will be most affected by …
Headline inflation may have dropped back in Canada in November (13.30 GMT) We expect the Czech central bank to keep interest rates on hold (13.30 GMT) Sign up here for our Drop-In on Wednesday to discuss the BoJ decision Key Market Themes Although …
20th December 2022
Click here to read the full report. Table of Key Forecasts Overview – The sharp slowdown in EM GDP growth seen in 2022 is likely to be followed by further weakness across most of the emerging world in 2023. Sluggish growth and falling inflation will …
The government’s reform agenda struggled for momentum in 2022 as key state elections (notably in Uttar Pradesh in March and Gujarat in December) dominated the calendar, and surging food and fuel prices set a tricky political backdrop. But the results of …
MNB staying the course as inflation pressures persist Hungary’s central bank (MNB) left its base rate on hold again at 13.00% and is likely to use its communications later today to reaffirm its commitment to its market stabilisation tools to defend the …
Does the Bank of Japan’s surprise announcement about changes to its yield curve control policy point to a fundamental shift in its monetary stance? Is this new regime defensible? And what will these changes mean for JGBs the yen, and for financial markets …
The performance of African economies diverged early this year, but the latest data provide clearer signs that growth across the region is now slowing. Economic weakness seems most pronounced in Ghana, where the impact of the country’s sovereign debt …
Chief Global Economist Jennifer McKeown and colleagues from across our macro services held a special briefing on what to expect from major DMs and EMs in 2023. In this 20-minute session, the team will be answered client questions as they discussed the …
Wider YCC band not start of tightening cycle The Bank of Japan today tweaked its Yield Curve Control (YCC) settings by widening the tolerance band around its yield target but we don’t expect it to hike its short-term policy rate anytime soon. The Bank’s …
