Central Bank Views
RBA Cut Rate to 0.5%, Being the First Central Bank to Ease Due to Coronavirus
RBA becomes the first central bank to cut interest rate in light of the negative impacts from the coronavirus outbreak. The central bank lowered the cash rate by -25 bps to 0.50% in March, expected to ease further in the near future. As revealed in the accompanying statement, the...
Bets of BOC Rate Cut Increased as Domestic Growth Loses Steam while Coronavirus Gets More Worrying
The market has priced in a 60% chance of a BOC rate cut this week, up from virtually 0% two weeks ago. While moderation in domestic growth has suggested that further easing is likely, the coronavirus outbreak and its impact have the potential to push forward the rate cut...
RBA to Keep Powder Dry Next Week, Could Push Forward Rate Cut to April
RBA is expected to leave the Bank rate unchanged at 0.75% in March. However, disastrous coronavirus outbreak in China is expected to hurt Australia's economy, triggering the members to push forward further easing in as soon as April. Indeed, the market has priced in 60% chance of a rate...
Uncontrollable Coronavirus Spread Could Force the Fed to Resume Easing
The FOMC minutes for the January meeting revealed that policymakers remained content about the domestic growth outlook. However, they acknowledged the growing uncertainty emerged from the coronavirus outbreak. This could present significant downside risks to global growth. The situation of the epidemic has deteriorated significantly since the last meeting....
RBA Minutes Reveal that Members Consider Cutting Rates Below 0.75%, Warn of Coronavirus Uncertainty
In contrast to February’s RBA meeting statement, which demonstrated a less dovish outlook, the minutes revealed that the members considered lowering the policy rate further. Yet, they decided to keep the powder dry on concerns over “risks associated with very low interest rates”. The central bank was upbeat about...
RBNZ’s Next Move could be Rate Hike
RBNZ left the OCR unchanged at 1%. Yet, its message came in less dovish than expected. The members were upbeat about the employment situation and inflation. While coronavirus would affect domestic economy, the impact would be short-lived. Policymakers project GDP growth to accelerate in the second half of the...
RBNZ to Leave OCR Unchanged at 1% and Warn of Risks Associated with Coronavirus
RBNZ is widely expected to leave the OCR unchanged at 1%. Upbeat economic developments since the November meeting should warrant removal of easing bias in February. However, outbreak of coronavirus from China suggests that risks to global growth are greatly skewed to the downside. This should cause the members...
RBA Left Cash Rate at 0.75%. Less Dovish on Growth Despite Headwinds
RBA left the cash rate unchanged at 0.75%. To our surprise, policymakers appeared more upbeat on the economic outlook than we had anticipated. While acknowledging uncertainty to growth mainly driven by bushfires and China’s coronavirus, the members adopt a wait-and-see mode to the impacts. They also preferred to gauge...
RBA Probably Stays Put in February, Rate Cut Inevitably in Second Quarter
The encouraging employment report might make the case of rate cut less strong this month. Economic developments since the December meeting have been mixed at best. Although job market and inflation showed improvement, GDP growth in the third quarter slowed as contribution from household spending dropped while impacts of...
BOE Voted 7-2 to Keep Rate Unchanged, Warned of Weak Inflation
BOE kept the Bank rate unchanged at 0.75% but revised lower GDP growth and inflation forecasts. British pound strengthened against US dollar as the Committee voted 7-2 for the decision. The market had anticipated more members to support rate cut. Once again, Michael Saunders and Jonathan Haskel favored lowering...
Fed Delivered Message with Dovish Tweak, Remaining Concerned about Low Inflation
FOMC left the Fed funds rate unchanged at 1.50-1.75% as widely anticipated. The accompanying statement contained few changes which were skewed to a mildly dovish side. Given the Fed’s dissatisfaction over weak inflation and uncertainty over global growth, the market has now priced in over 80% that the Fed...
Chance of BOE Rate Cut Balanced, as Weak Inflation is Offset by Strong Business Sentiment and Job Market
The market is mixed regarding whether BOE will lower the Bank rate at the upcoming meeting. Now the dust has settled for Brexit, the focus is turned to BOE’s monetary policy decision. Weakening in inflation suggests that a rate cut might be appropriate. Meanwhile, a cut in governor Mark...
FOMC to Stay Put this Week
It is widely expected that the Fed will leave the policy rate unchanged at 1.5-1.75% at the January meeting. Meanwhile, we believe the accompanying statement will contain only minor change from the one in December. Major economic data will be released days after the FOMC meeting. Yet, the Fed...
BOC Turned Dovish Again, Opening Door For Rate Cut
While leaving the monetary policy unchanged at expected, BOC delivered a dovish tone at the accompanying statement. This raised hopes of a rate cut in coming months and sent the loonie lower. The central bank has turned less confident about the near-term economic outlook, forecasting that the slowdown in...
BOC to Leave Rate Unchanged at 1.75%. Disappointing Data Likely Due to Temporary Factors
BOC is likely to leave the policy rate unchanged at 1.75% at the meeting this week. While several macroeconomic data released since the December meeting surprised to the downside, it could take a few more months to confirm the trend. BOC also appears to have downplayed the downside risks...
ECB to Leave Monetary Policy Unchanged, Focus Turns to Strategic Review
At the upcoming meeting, ECB members would likely acknowledge stabilization in the region’s economy, while reiterating accommodative monetary policy. The focus of the meeting would be the strategic review, the first assessment of the central bank’s monetary policy in two decades. We do not anticipate any change in the...
BOE Left Policy Rate Unchanged. Neutral Tone Maintained
At the last BOE meeting headed by Mark Carney, the members voted 7-2 to leave the Bank rate unchanged at 0.75%. The members voted unanimously to maintain the purchase of government bonds at 435B pound and corporate bonds of 10B pound. The members maintained a neutral stance in the...
BOE Preview – Members might Set a Dovish Tone while Leaving Rate Unchanged
BOE will likely leave the Bank rate unchanged at 0.75% this week. There will be no press conference or inflation report accompanying the meeting. However, it will be interesting to see if the members adjust its tone after UK elections. We expect the central bank to skew to the...
RBA Hinted Further Easing in 1Q20
At the RBA minutes for the December meeting, policymakers affirmed that it was appropriate to leave the cash rate unchanged at 0.75%. While acknowledging stabilization in the economy, the members, however, noted that further easing would be possible. They pledged to reassess the economic development in February 2020 and...
Lagarde Carries On Draghi’s Legacy at ECB
At the first ECB led by Christine Lagarde, the members decided to leave the deposit rate unchanged at -0.5%. Meanwhile, the main refi rate and marginal lending rate also stay unchanged at 0% and 0.25%, respectively. The pace of the asset purchase program, effective on November 1, also stays...