Filtered by Topic: Monetary Policy Use setting Monetary Policy
Malaysia’s central bank (BNM) raised its main policy rate by 25bp (to 2.75%) today, but with inflation falling and growth set to slow, we think the tightening cycle is nearing an end. Today’s move came as little surprise and was accurately predicted by …
3rd November 2022
BNM closing in on the finish line Malaysia’s central bank (BNM) raised its main policy rate by 25bp (to 2.75%) today, but with inflation falling and growth set to slow, we think the tightening cycle is nearing an end. Today’s move came as little surprise …
The Fed raised its policy rate by another 75bp today, to between 3.75% and 4.00%, but laid the groundwork in the accompanying statement for a downshift to a 50bp hike at the next meeting in mid-December. With Chair Jerome Powell noting repeatedly that the …
2nd November 2022
Labour market strength will encourage RBNZ to hike by 75bp this month New Zealand’s labour market remained very tight last quarter and coupled with the continued strength in inflation. the RBNZ will probably hike by 75bp in a couple of weeks. The 1.3% q/q …
1st November 2022
This dashboard gives a holistic overview of financial conditions across major developed economies. It presents our proprietary financial conditions indices (FCIs) as well as a selection of input variables used in our FCIs. Our FCIs indicate the ease with …
The dovish tilt among central banks has led to more talk of “pivots”, but this will mean different things for different banks. The ECB may be shifting to a slower pace of tightening, but the peak in rates is still some way off. That peak is closer for …
On some measures China’s current COVID situation is about as bad as it has ever been. While far fewer infections are being found daily than at the peak of the Omicron wave, new cases are geographically spread just as wide, with the result that the …
The Reserve Bank of Australia hiked rates by 25bp today and the upward revision to its inflation forecasts are consistent with our view that rates will peak at an above-consensus 3.85%. However, we still see a good chance that policy will be loosened …
RBA will lift rates more sharply than most anticipate The Reserve Bank of Australia hiked rates by 25bp today and the upward revision to its inflation forecasts are consistent with our view that rates will peak at an above-consensus 3.85%. The Bank’s …
Economists from our UK Economics team held a briefing ahead of the MPC’s November meeting to discuss why we think that rates will rise further than most analysts are expecting and the conditions that would be needed for the Bank to shift to a slower pace …
31st October 2022
Central banks across the region have been stepping up the pace of intervention in foreign exchange markets to support their currencies, resulting in a drop in FX reserves. In most countries, reserves are down by around 10% from their recent peaks, and …
The past month has brought further signs that economies across Sub-Saharan Africa are in the midst of a slowdown. The latest activity data out of South Africa suggest that, after GDP contracted in Q2, its economy fell into a technical recession in Q3. …
The Bank of Canada now judges that there is a 50/50 chance of GDP growth turning negative, which caused it to slow the pace of its tightening to a 50 bp hike this week and to hint that it will drop to a 25 bp at the final meeting of the year. We assume …
28th October 2022
The 2.6% annualised rise in third quarter GDP was a lot worse than it looked, with growth in underlying demand grinding to a near-halt. At the same time, there are mounting signs that economic weakness will soon feed through to disinflation in core …
Russian central bank governor Elvira Nabiullina’s post-meeting press conference reinforced the message that policymakers are increasingly concerned about pro-inflationary risks, including those stemming from the recent mobilisation of reservists. That …
In general we think the data released this week are consistent with our three key calls on the euro-zone. The first is that the region is heading for a deeper recession than most anticipate. Our forecast is for a 1.8% decline in GDP in 2023 is below both …
What to expect in 2023 We published our latest Emerging Asia Economic Outlook this week, which contains our detailed forecasts. Here are three key calls from the report. Sharp slowdown ahead Growth across Emerging Asia looks set to slow sharply over the …
We published our Q4 Nordic & Swiss Economic Outlook this week. The key points are that we expect Switzerland, Sweden and Denmark to suffer recessions, while Norway might escape with only a sharp slowdown. But inflation will remain high in the Nordics and …
CBR brings its easing cycle to a halt Russia’s central bank left interest rates on hold at 7.00% today and highlighted the pro-inflationary risks stemming from the recent mobilisation of reservists. That said, we think this is likely to mark a pause in …
The RBI announced this week that it will hold an “additional” MPC meeting on Thursday 3 rd November. It’s not unusual for the committee to convene between scheduled meetings (the next meeting was due to take place in early December). Indeed, “emergency” …
Bank won’t make an about-face The stronger than expected Q3 inflation print has prompted some commentators to forecast a larger 50bp rate hike at next week’s RBA meeting following the step down from the four 50bp hikes in recent months to a smaller 25bp …
The Bank of Japan revised up its medium-term inflation forecasts while keeping policy unchanged today, but we still think that it won’t snuff out the budding virtuous cycle between incomes and wages . As widely anticipated, the Bank kept its interest rate …
Window for tighter policy is closing The Bank of Japan revised up its medium-term inflation forecasts while keeping policy unchanged today, but we still think that it won’t snuff out the budding virtuous cycle between prices and wages. As widely …
We expect the Bank of Japan to leave policy unchanged Russia’s central bank may cut its policy rate by another 50bp… (11.30 BST) …while we expect a 100bp rate hike in Colombia (19.00 BST) Key Market Themes Despite some dovish elements in today’s ECB …
27th October 2022
Rising price/wage expectations will prompt the MPC to hike rates aggressively on Thursday It’s almost 50-50 between a 75bps and 100bps hike, but we are going for 100bps Our forecast that rates will peak at 5.00% remains higher than the consensus …
The Norges Bank signalled in September that it intended to slow the pace of tightening, implying that it would hike by 25bp at the meeting next week. But with inflation data since then again coming in higher than expected, we think the Bank will opt for …
After raising rates by 75bp today, the ECB laid the groundwork for a slower pace of tightening to come. But we still think that the deposit rate will reach 3% next year. And while the Bank will set out some “key principles” for QT in December, we doubt …
Table of Key Forecasts Overview – EM GDP growth has slowed sharply this year and is likely to remain sluggish in 2023 and 2024 as weak external demand and tight financial conditions take their toll. Having started hiking rates much earlier than their DM …
ECB’s work is far from done The ECB is very likely to follow today’s 75bp rate hike with further aggressive increases in the coming months, even if we are right that the forthcoming recession will be deeper than most expect. The decision to maintain the …
Our Global Economics team held a 20-minute online briefing on the outlook for the global economy and policy on Tuesday, 8 th November. During this session, the team answered client questions as they highlighted key takeaways from their recently published …
Overview – Sub-Saharan Africa has suffered particularly heavily from the pandemic and then spillovers from the war in Ukraine, and the global recession will only add to the headwinds. Taken together with tight fiscal and monetary policy, we hold a …
Economists from our Emerging Markets and Markets teams discussed the outlook for EM financial markets in this regular dive into the big stories in EMs. In addition to their dive into what the macro picture means for the market outlook, the team answered …
The hawkish language in the statement accompanying the Brazilian central bank’s decision late yesterday, at which it left the Selic rate at 13.75%, reinforces our view that the sharp fall in inflation in the last few months won’t push Copom to cut …
Egypt’s central bank has just announced that it is shifting to a more flexible exchange rate regime, which we think will result in the pound falling 18% to 24/$ by end-2023 if not sooner. The move will result in some short-term economic pain but it will …
Governor Tiff Macklem shifted his tone notably today, reassuring that the Bank was “trying to balance the risks of over- and under-tightening”, whereas previously the emphasis had stressed that it was better to tighten too much rather than too little. …
26th October 2022
Current account deficits have widened to alarming levels in Poland, Hungary, Turkey and, most of all, Romania, in recent months which has contributed to the downward pressure on currencies this year – the Turkish lira, Hungarian forint and Polish zloty …
Stubborn core inflation points to fourth consecutive 75bp rate hike But pace of tightening likely to slow as policy becomes more restrictive Recession and falling inflation to prompt rate cuts by the end of next year Fed officials are gearing up for …
Bank slows pace of tightening despite ongoing inflation concerns Today’s smaller 50 bp interest rate hike, which took the overnight rate to 3.75%, suggests that the Bank of Canada is growing confident that its actions so far will be enough to vanquish …
The reversal of Truss/Kwarteng’s fiscal policies and Rishi Sunak’s appointment as the UK’s new Prime Minister has ushered in a period of calm in UK financial markets after the recent storm. Indeed, much of the extra political risk premia on gilts that …
Bank won’t make a U-turn and will opt for another 25bp hike next week But the upside surprise in Q3 inflation points to a higher peak in interest rates With GDP growth slowing sharply next year, we still expect rate cuts from late-2023 While the …
Inflation will approach 8% by year-end Inflation was stronger than expected last quarter and will rise further in Q4. That’s consistent with our forecast that the Reserve Bank of Australia will hike rates more aggressively than most anticipate. The 1.8% …
Brazilians head to the polls on Sunday to decide who’ll become the country’s next president in a heated run-off election between incumbent Jair Bolsonaro and his left-wing rival Lula. Lula is still the front runner, but the race is looking much tighter …
25th October 2022
MNB to keep relying on unconventional tools to support the forint Hungary’s central bank (MNB) left its base rate on hold today and we expect that the central bank will continue to use its new “market stabilisation tools” to keep short-term interest rates …
Table of Key Forecasts Global Overview – Persistently high inflation and more aggressive monetary policy tightening now seem set to cause a global recession. While we had previously anticipated contractions in several economies, the gloom has spread …
Vietnam’s central bank (SBV) hiked its main policy rate by a further 100bp (to 6.0%) yesterday at an unscheduled meeting as it attempted to support the currency. With the dong likely to remain under downward pressure, further hikes are likely. …
Although the energy crisis in Europe has dealt a blow to the EU’s near-term green ambitions, a combination of economic incentives, NextGenEU funding, and geopolitical expediency will cause the bloc to re-double its decarbonisation efforts. However, …
24th October 2022
