Filtered by Topic: Monetary Policy Use setting Monetary Policy
The Bank of Thailand hiked interest rates today by a further 25bps (to 1.25%), and reiterated that it is likely to continue tightening policy gradually over the coming months. The decision was correctly predicted by 17 out of the 19 analysts polled by …
30th November 2022
Thailand: gradual tightening cycle to continue The Bank of Thailand hiked interest rates today by a further 25bps (to 1.25%), and reiterated that it is likely to continue to tighten policy gradually over the coming months. The decision was correctly …
Headline inflation close to a peak, but core may rise further November’s fall in headline inflation in Germany and Spain suggest that the euro-zone headline rate will come in lower than we had anticipated when it is published tomorrow, and is now close …
29th November 2022
Concrete signs of an effort to exit from zero-COVID are emerging, with a notice today of a push to vaccinate the elderly. The low level of vaccine coverage of the most vulnerable is, along with a lack of healthcare capacity, the major constraint on …
Most central banks across Sub-Saharan Africa raised interest rates over the past month and, in contrast to many other parts of the emerging world, we think tightening cycles will last a while longer. Interest rates were hiked in Nigeria, South Africa, …
Higher interest rates beginning to influence the economy October’s money and credit figures highlight how higher interest rates are starting to influence the economy. Higher interest rates are weakening the demand for credit, especially for mortgages, …
Most countries in the region have now reported GDP figures for the third quarter, and growth was generally faster than we (and the consensus) had expected. One factor behind this resilience was the strength of private consumption, which held up well in …
Pace of tightening to slow as growth comes off boil and inflation passes the peak 25bp hike to repo rate likely next week, and cycle to draw to a close by early-23 Rate cuts could come onto the agenda by late next year With inflation having passed the …
Higher interest rates are weighing on credit and attracting savings October’s money and credit figures reveal further signs that households continue to remain cautious and higher interest rates are starting to weigh on the economy. The £0.8bn rise in …
Untangling Ghana’s fiscal mess? Official statements this week by the authorities in Ghana signalled commitment to restoring fiscal and debt sustainability, and left little doubt that this will include a sovereign debt restructuring. Finance Minister Ken …
25th November 2022
Banxico tightening debate set to heat up Data and developments this week suggest that the debate at Banxico over when to end the tightening cycle is set to heat up. The risks are tilting towards rates rising a bit more than we currently expect. …
ECB officials were out in force again this week, disseminating clues about the size of the next rate hike and their plans on quantitative tightening (QT). Their comments suggest that a slowdown in the pace of tightening, from a 75bp to a 50bp hike, …
The Treasury has started to make payments to the Bank of England’s Asset Purchase Facility (APF) to cover the losses it has racked up because of the Bank of England’s gilt purchases. While this won’t force the Chancellor to tighten fiscal policy …
The reduction in the required reserve ratio (RRR) that the PBOC just announced will help banks follow through on a directive to defer loan repayments from firms struggling with widening lockdown restrictions. Market interest rates may also edge down as a …
RBNZ willing to send New Zealand into recession While the analyst consensus is that New Zealand will generate decent GDP growth of just under 2% next year, we already predicted last month that the economy will enter recession. And with the RBNZ this week …
A fall in Tokyo’s inflation might suggest that Japan’s national inflation has peaked (Thu.) Catch up on today’s Asia Macro Drop-In, and all our Drop-Ins, here … …or check out our Weekly Briefing podcast episodes here Key Market Themes Despite the …
24th November 2022
The big surprise so far this year has been the resilience of housing starts which, despite falling from their 10-month high of 300,000 annualised in September, remained at a relatively strong 267,000 in October. While developers have largely shrugged …
Inflation appears to have finally peaked for emerging markets – but how quickly will price pressures now ease, and what will that mean for the 2023 outlook? In December's monthly dive into the big stories in EM macro and markets, economists from across …
Today’s decision in South Africa to raise the benchmark rate by 75bp, to 7.00%, signalled that policymakers remain in inflation-fighting mode and the tightening cycle has further to run. That said, the balance on the MPC appears to be shifting towards …
ECB account gives little away on next steps There are no significant clues in the account of the ECB’s October meeting about the pace and extent to which the Bank will raise interest rates in December and next year. A 50bp hike seems most likely next …
Stronger core inflation will support the hawks at Banxico The further fall in Mexico’s headline inflation rate, to 8.1% y/y, in the first two weeks of November was driven by easing non-core price pressures. But core inflation picked up, which will …
CBRT final act? Turkey’s central bank (CBRT) delivered another 150bp interest rate cut, to 9.00%, at today’s meeting and suggested that this marked the end of the easing cycle. We’ll take the CBRT for its word but there is clearly a risk that President …
Monetary tightening cycles in EMs are advanced relative to DMs, and are now drawing to a close in many countries. Elevated inflation will mean that policy will stay tight over the coming months, but the conditions for several EM central banks to start …
This morning’s 75bp increase in the Riksbank’s policy rate was in line with expectations, and both the press statement and Monetary Policy Report are consistent with our view that policymakers will raise rates to a peak of around 3% next year. Beyond …
Tightening cycle not yet finished This morning’s 75bp increase in the Riksbank’s policy rate was in line with the consensus and market expectations while the press statement is consistent with our view that policymakers will raise rates to a peak of …
The Bank of Korea (BoK) today raised interest rates by a further 25bps (to 3.25%) and the accompanying hawkish statement suggests the tightening cycle still has a little further to run. We are tweaking our forecasts for next year and now expect one more …
The Bank of Korea today raised interest rates by a further 25bps (to 3.25%), but with growth slowing and inflation easing, we think there is a good chance this marks the end of the central bank’s tightening cycle. Today’s decision came as little surprise …
How many is “various”? The minutes of the Fed’s early-November policy meeting suggest that although most officials were in favour of slowing the pace of rate hikes at upcoming meetings, there was no consensus on how high the peak in rates would ultimately …
23rd November 2022
Having surged for the best part of two years, EM inflation appears to have passed the peak in this cycle. Our measure of aggregate EM inflation dropped from 7.8% y/y in September to 7.4% y/y in October. (See Chart 1.) Looking ahead, we think that …
With fiscal policy no longer expected to be ultra-loose and some signs emerging that domestic price pressures will ease further ahead, we no longer expect the Bank of England to raise interest rates to a peak of 5.00%. Our new forecast of an increase …
Surprisingly strong inflation to keep hawks in majority South Africa’s headline inflation rate picked up unexpectedly in October, to 7.6% y/y, and the jump in core inflation will be a particular worry for policymakers. Another 75bp hike in the repo …
The Reserve Bank of New Zealand hiked the overnight cash rate by 75bp as most had anticipated but signalled a much higher peak in the OCR than in August. We’re now forecasting another 75bp hike in February followed by a final 50bp hike in April, but we …
RBNZ will hike rates above 5.0% The Reserve Bank of New Zealand hiked the overnight cash rate by 75bp as most had anticipated and it now seems likely that rates will peak closer to 5.5% instead of our current forecast of 5.0%. The statement was very …
Although the annual rates of core inflation increased in October, we suspect the Bank of Canada will point to the declines in the 3-month annualised rates of CPI-trim and CPI-median to justify dropping down to a 25 bp interest rate hike at its meeting …
22nd November 2022
The Central Bank of Nigeria (CBN) raised the benchmark rate by 100bp, to 16.50%, today, and MPC members appear to be itching to take their foot off the monetary policy brakes. But we suspect that the incoming inflation data will prevent them from doing so …
The resilience of consumer spending is keeping hopes of a soft landing alive. Although GDP growth looks to have slowed in the fourth quarter, and most leading indicators of recession are flashing red, solid retail sales and a jump in vehicle sales …
MNB hasn’t won its inflation battle yet Hungary’s central bank (MNB) left its base rate on hold today, at 13.00%, for a second consecutive meeting and reaffirmed that it would continue to use its “market stabilisation” tools to defend the forint. With …
The Bank of Israel (BoI) slowed down the pace of tightening today with a 50bp rate hike, to 3.25%, as it emphasised the tightening delivered so far and the early signs that economic activity is slowing. We think it will end its tightening cycle early next …
21st November 2022
The RBI has hiked interest rates by 190bps since May and, while that is relatively benign compared to the moves seen in many other EMs, this tightening is now feeding through to the economy. Purchases of big ticket items such as passenger vehicles have …
Voters in Turkey head to the polls in 2023 and if the ruling People’s Alliance and President Erdogan cling on to power, the authorities are likely to double down on their “new economic model”, raising the threat of simultaneous currency, banking and …
Headline inflation shot up to 3.7% y/y in October , the strongest since December 1990 while inflation excluding fresh food and energy rose from 1.8% to 2.5%. Although this puts inflation well above the Bank of Japan’s target, the case for tightening is …
This week Fed officials pushed back against the market rally in the wake of October’s unexpectedly weak CPI report, but with only limited success. Despite officials reaffirming that they still had “a ways to go” in tightening policy and that they …
18th November 2022
As the dust settles on this week’s Autumn Statement, we take a step back and answer three key questions. (Clients can catch up on our detailed analysis and our Drop In webinar following Thursday’s fiscal event here and here .) With the economy entering …
Lula’s spending cap exemption plans spook markets Brazil’s financial markets remained on the backfoot this week as the Lula team stepped up its fight against the spending cap. And, while officials have since tried to reassure investors, the developments …
Although the data this week showed renewed rises in the annual rates of CPI-trim and CPI-median inflation in October, our calculations show that the timelier 3-month annualised measures both declined. That could persuade the Bank of Canada to drop down …
In next week’s MPC meetings in South Africa and Nigeria, inflation concerns are likely to hold sway over economic woes, and we expect both central banks to keep raising interest rates. South Africa’s tightening cycle is likely to continue for some time, …
Rebound in Asian currencies unlikely to last The rebound in Asian currencies triggered by the weaker-than-expected US CPI data for October already appears to be running out of steam. A number of currencies, including the won and the rupiah, have dropped …
Having increased sharply throughout the year, we think that emerging market (EM) local currency sovereign bond yields will probably only increase by a little more in the first half of next year, despite a looming world recession. Yields may then start to …
