Central Bank Views
Fed Turns Even More Dovish in March – Downgrading Economic Outlook, Pausing Rate Hike Cycle, Ending Balance Sheet Reduction
The Fed has turned more dovish than previously expected. Besides downgrading the economic assessments at the policy statement, the members now expect no change in interest rate this year, followed by one rate hike in 2020. They also revised lower the economic projections and decided to terminate the balance...
BOE Preview – Staying Cautious Despite Temporary Bounce in Economic Data. Brexit Uncertainty Remains
BOE would leave the Bank rate at 0.75% in March. Despite the bounce in the January data, the members would still remain cautious as global economic slowdown remains a key theme of this year. Meanwhile, the members would maintain a cautious outlook over Brexit uncertainty, especially the UK parliament...
FOMC Preview: Fed to Maintain Dovish Tone and Announce Plan to End Balance Sheet Reduction
At the upcoming FOMC meeting, the members would vote to leave the Fed funds rate target at 2.25-2.5%. We expect reinforcement of the dovish message conveyed in January. The focus is on the plan to complete the reduction of its balance sheet, which peaked at US$ 4.5 trillion in...
ECB Announces new TLTROs, Markedly Downgrades Growth and Inflation Forecasts
ECB left the main refi rate, the marginal lending rate and the deposit rate unchanged at 0.00%, 0.25% and -0.40%, respectively. However, much change was made in the economic assessment and the forward guidance, as a result of “moderation in the pace of the economic expansion”. The central bank...
BOC’s Dovish Shift Widened Yield Spread, Sending CAD Lower
BOC left the policy rate unchanged at 1.75%. What caused the market dramatic market movement was its dovish turn – stripping off the forward guidance that the next move would be a rate hike. The abrupt turn in just two months marks the weaker than expected slowdown in Canada’s...
ECB Preview – Downgrades in Forecasts, Changes in Forward Guidance and Hints on New Lending
More dovish messages from ECB seem inevitable at the upcoming meeting. Clouded by Brexit uncertainty, trade conflicts with the US and global economic slowdown, economic developments since the January meeting turned out weaker than expected. We expect ECB to revise lower its GDP and inflation forecasts, extending the duration...
BOC Preview – Risk on Growth is to the Downside
BOC would leave the policy rate unchanged at 1.75% at this week’s meeting. Since the last meeting, economic data released pointed to slowdown in Canada’s growth momentum. Although Governor Stephen Poloz has recently affirmed at the central bank should still increase the policy rate to the neutral level at...
FOMC Minutes – Balance Sheet Reduction Likely Ends This Year
In the minutes for the January FOMC meeting, the members elaborated the rationale for their dovish shift. While affirming solid growth and the resilient employment market, the members focused on the softening inflation and were concerned about the “muted” price pressure. Together with rising uncertainty from aboard, including rapid...
NZD Jumped although RBNZ Postponed Timing of Rate Hike (At Least Not Expecting a Cut)
Kiwi rallied although RBNZ left the OCR unchanged at 1.75% as anticipated. The central bank did turn slightly more dovish than in November but the market had expected more. The central bank indicated that “the tailwinds to growth have eased” while “trading-partner growth is starting to slow”. It also...
RBNZ Preview – Turning More Dovish while Affirming Next Move Can be Up or Down
We expect RBNZ, at next week’s meeting, to leave the OCR unchanged at 1.75% and downgrade its economic growth forecasts. We believe the tone would be tilted to the dovish side as both global and domestic environment deteriorated since November. Increased downside risks and heightened uncertainty likely warrant a...
BOE Downgrades Growth and Inflation Forecasts, Expects Fewer Tightening Despite Retaining Forward Guidance
BOE joined other central banks in downgrading the economic growth outlook. In addition to heightened risks of global growth slowdown, ongoing Brexit uncertainty is the key concern for the members. The members voted unanimously to keep the Bank rate at 0.75% and the asset purchase program at 435B pound....
RBA Review – Policy Rate to Stay Low for Some Time as Risks to Growth and Inflation Skewed to Downside
As widely anticipated, RBA left the cash rate unchanged at 1.5% for the 27th consecutive meeting. Yet, it has turned less optimistic about Australia’s economic outlook while noting downside risks to global growth.
As suggested in the accompanying statement, the members indicated that “the central scenario is for the Australian...
BOE Preview – Downgrade on Economic Outlook as Brexit Remains Uncertain
Again, we expect BOE to vote unanimously to keep the Bank rate unchanged at 0.75%, as well as to leave the asset purchase program at 435B pound, at the February meeting. While the focus of the meeting remains on Brexit uncertainty, economic assessment and forward guidance, the dynamics of...
FOMC Review – Fed Calls for Patience on Further Rate Hike
The Fed addressed the issues we are concerned with, in quite a dovish tone, at the January meeting. As widely anticipated, the Fed funds rate stayed unchanged at 2.25-2.5%. The members removed the forward guidance of gradual interest rate increases. They called for patience on further normalization, as inflation...
FOMC Preview – How Dovish is the Fed?
There are several issues we are expecting from the FOMC meeting later this week. While it is widely anticipated that the Fed would leave its policy rate unchanged at 2.25-2.5%, the potential changes in the accompanying statement and the message conveyed by chair Jerome Powell would be indicative of...
ECB Turns Dovish amid Heightened Global Uncertainties
The ECB meeting evolved as we had expected: more dovish, downgraded assessment on economy, leaving unchanged the forward guidance on interest rates. the central bank has acknowledged that the uncertainties in the global economy have intensified and can persist for quite an extended time. No change was made in...
BOJ Cut CPI Forecasts, But Is it Realistic to Expect Tax Hike will Help Inflation?
As widely anticipated, BOJ voted 7-2 to leave left the policy rate unchanged at -0.1% in January. All other policies also remained intact: purchases of JGBs at a pace of 80 trillion yen/ year and maintenance of 10-year JGB yield at 0%, with trading band at +0.2% and –...
ECB Preview – ECB to Turn More Dovish as Economic Data Surprise to Downside
We expect ECB to turn more dovish at the meeting later this week, as economic data have pointed to further weakness. There are several issues worth watching for the meeting: rhetoric on economic outlook, instruments to alleviate tightening of credit conditions after the end of QE, and forward guidance...
FOMC Minutes Reveal Dovish Notes Which Were Hidden in December
To us, the message conveyed in the FOMC minutes for the December meeting was somehow different from those at the post-meeting press conference. From the post-meeting statement and Chair Jerome Powell’s speech, we judged that the Fed turned a bit more cautious over the economic and financial market outlooks....
BOC Pushed Back Timing for Next Rate Hike, Trimmed GDP Growth and Inflation Forecasts for 2019
As we expected, BOC left the policy rate unchanged at 1.75% in yesterday. Policymakers admitted that the decline in oil price has “material” impact on the economy. Yet, they viewed the impact as transitory. Reflecting the view on economy projections, the central bank downgraded the GDP growth forecast for...