Central Bank Views
RBA Removes Rhetoric of “No Strong Case” for Near-Term Rate Cut
RBA turned more dovish, than what was suggested in the meeting statement, in May. As the minutes revealed, policymakers expected to cut the policy rate if inflation remains weak while the unemployment rate climb higher. The latest economic forecasts, published two weeks ago, were based on the assumptions that...
RBNZ Cut Policy Rate to 1.5%, Resuming Rate Cut for the First Time since 2016
For the first time since November 2016, RBNZ lowered the OCR, by +25 bps, to 1.5% in May. At the monetary policy statement, it indicated that “a lower OCR is necessary to support the outlook for employment and inflation consistent with its policy remit”. Some banks, including ANZ and...
RBA Left Rate at 1.5%. Pledged to Monitor Job Market
RBA left the cash rate unchanged at 1.5% in May. Yet, the accompanying statement remained dovish, citing sharp deceleration in core inflation, decline in house price and subdued household consumption as key areas of concerns. On the monetary policy outlook, the members would monitor the employment situation closely, as...
RBNZ Preview – Chance of Rate Cut Increases as Job Market and Inflation Disappoint
The market has priced in over 50% chance that the RBNZ would lower the OCR, by -25 bps, to 1.50% in May. Major economic indicators since the last meeting weakened. In particular, disappointing employment report and inflation in the first quarter appear to have increased the odds of a...
BOE Upgraded GDP Growth Outlook, Warned of Faster- than- Expected Rate Hike Path
BOE voted unanimously to leave the Bank rate unchanged at 0.75% and the asset purchase program at 435B pound. As expected, the central bank delivered a slightly more hawkish tone as Brexit was delayed to October 31, temporarily lowering the risk of no-deal Brexit. The members are more upbeat...
Fed Judges Weak Inflation as Transitory, Dismissing Rate Cut Chance
FOMC members decided unanimously to keep the target range for the fed funds rate unchanged at 2.25-2.50%. Meanwhile, the IOER was lowered to 2.35% from 2.4%. The slight change in the accompanying statement showed a more upbeat assessment on the economic developments, despite softening inflation. It was Chair Jerome...
BOE Preview: Looking Through Strong First Quarter, with Focus on Softer Inflation and Prolonged Brexit Uncertainty
Some positive notes are seen in the first quarter, both domestically and globally. Yet, these are neither sufficient not strong enough to alter BOE’s stance in May, the first monetary policy meeting since Brexit was offered an extension until October 31. The central bank is certain to leave its...
FOMC Preview -Fed to Reiterate Patience Rhetoric Despite Strong First Quarter Growth, Focus on Soft Inflation
Despite the pleasant surprise in the first quarter GDP growth, the Fed would still leave its policy rate unchanged at the upcoming meeting. The Fed funds rate target is expected to stay at 2.25-2.50%. Its forward guidance would stay unchanged, calling for patience in future monetary policy move. At...
BOC Erases Rate Hike Possibility in Near- to Medium- Term
BOC sent a mixed message in its April meeting. As shown in the accompanying statement, it has turned more dovish as it removed any chance of rate hike in the near- to medium- term. The central bank downgraded GDP growth forecast, both domestically and globally. It also lowered the...
BOC to Look Through Strong March Inflation and Maintain Dovish Stance
At the BOC meeting next week, we expect Governor Stephen Poloz to reinstate the stance that the next policy rate move would be data-dependent. The latest inflation report surprised to the upside. Yet, the central bank would likely look through it as other data continued to show decelerating growth...
RBA Minutes – Confirming Dovish Monetary Policy Stance. Low Inflation Raises the Chance of Rate Cut
While RBA had left the cash unchanged at 1.5% in April, the minutes for the meeting was closely-watched. Recall that the central bank turned more dovish as it acknowledged more downside risks to the growth outlook. The minutes reinforced this view. More importantly, the minutes affirmed that the central...
ECB Review – Reinforcing Dovish Tone. TLTROs Details to be Announced in Coming Months
ECB shrugged off the improvement in the economic data since the last meeting, reinforcing its dovish stance and raising the likelihood of further easing measures. The focus of the meeting was arrangements for TLTRO III and the tiered deposit rate system. For the former, President Mario Draghi has suggested...
FOMC Minutes – Pouring Cold Water on Doves who Expect Rate Cut This Year
Contrary to the market which has been pricing in a rate cut later this year, the Fed affirmed in the minutes for the March meeting that the members’ consensus was no change in the monetary policy for the rest of the year. Indeed, a few of them still favored...
ECB Preview – More Warning on Downside Risk, No Big Move Until June
Despite some improvements in the economic data released since the March ECB meeting, the overall picture remains mixed and inflation pressure is still soft. There have been plenty of discussions about ECB’s future monetary policy since the last meeting.
First, the central bank made no elaboration on the details after...
RBA Review – Holding Rate On Record Low and Turning More Dovish on Economic Outlook
Unsurprisingly, RBA left the cash rate unchanged at 1.5% for a 29th meeting.
While the members acknowledged more downside risks on the economic outlook, they maintained the monetary policy forward guidance unchanged. However, Aussie weakened after the announcement, amidst heightened expectations that the central bank would cut the policy rate...
RBA Preview – Expecting a Dovish Shift on Monetary Policy Stance
The lack of momentum in economic activities would soon dent RBA's hope of higher household consumption (and eventually higher inflation), as a result of further decline in the unemployment rate. We expect the central bank to turn more cautious at next week's meeting. Although the members agreed in March...
RBNZ Review – Next Move would be Rate Cut as Risks to Growth Skewed to Downside
As we expected, RBNZ has turned more dovish in March. A more pessimistic view about the domestic and global economic outlook has led members to adjust their forward guidance on the monetary policy stance. The members now expect to cut the policy rate in the next move. The market...
RBNZ Preview – Can RBNZ Maintain Neutral Stance amidst Deteriorating Outlook?
RBNZ is expected to leave the cash rate at 1.75% in March. However, as both domestic and global economic slowdown has intensified since the February meeting, we doubt if the central bank could maintain the guidance that next rate change could be “up or down”. Indeed, we expect the...
BOE Left Policy Unchanged. Next Move Depends on Brexit Outcome
BOE voted unanimously to leave the Bank rate unchanged at 0.75%, and the asset purchase program at 435B pound, in March. Dataflow during the inter-meeting period was mixed, while the Brexit outlook has become even less certain. The members indicated that domestic economic developments, and hence the monetary policy,...
SNB Downgraded Inflation Forecast for Switzerland, Pledged to Curb Franc’s Strength
SNB left target range for the three-month Libor unchanged at between -1.25% and -0.25%, and maintained a dovish tone. Apart from pledging to intervene the “highly valued” Swiss franc, the central bank downgraded its inflation forecasts. However, this appears to have added limited selling pressure to franc, as both...