Central Bank Views
Fed Indicated that QE Tapering is Premature and Bar to Adjust Policy is High
The December FOMC meeting contained little news. However, Chair Powell sent a clear indication that tapering is “premature” for the time being and that the bar to adjust the monetary policy is higher. The Fed left all measures unchanged at the meeting. The Fed funds rate stays at 0-0.25%...
FOMC Preview – Cautious about Economic Weakness but Fiscal Stimulus should lend Support
The FOMC meeting in the coming week will not bring any change in the monetary policy. Economic activities have moderated since the December meeting, while resurgence in the coronavirus cases could hurt economic activities more seriously than previously expected. Yet, roll-out of more fiscal stimulus and positive vaccination progress...
ECB Gets Slightly More Hawkish, Revealing that it might Not Use All of PEPP Envelope
The ECB left its powder dry in January. While continuing to warn of the downside risks on the Eurozone and global economy, the central bank delivered a hawkish tweak about operation of the Pandemic Emergency Purchase Program (PEPP). On the monetary policy measures, the central bank left the size...
BOJ Downgraded Economic Outlook for FY2020, Inflation to Fare Better During Forecasting Horizon
The January BOJ is non-eventful. Cautioning that risks to the economic outlook is tilted to the downside, the central bank announced to leave all its stimulus measures unchanged. In contrast to speculations, the central bank did not adjust the implicit trading band of the 10-year JGB yield.
There is a...
ECB Preview – Awaiting More Comments of Strong Euro
While ECB would likely leave its monetary policy measures unchanged this week, the market should focus on several issues: members’ view on recent euro strength, discussions on QE tapering and economic impacts of renewed lockdown. Following the recalibration in December, ECB would leave the size of the Pandemic Emergency...
BOC Preview – All Eyes on Likelihood of Micro Rate Cut
BOC is widely expected to leave its overnight rate at the effective lower bound of 0.25% in January. The size of asset purchases will also stay unchanged at CAD4B/week. Over the past month, there has been market speculations about the possibility of a micro rate cut since November. While...
BOE Stays Put as Deadline of Brexit Talk Approaches
BOE left the Bank rate unchanged at 0.1% and the asset purchase program at 875B pound. The central bank remained cautious about the “unusually uncertain” economic outlook and pledged to take “whatever additional action is necessary” if the outlook for inflation weakens. Despite forecasts that GDP growth in December...
Fed Pledged to Continue QE Until “Substantial Progress” Seen in Employment and Inflation
The major changes in the December were forward guidance in the asset purchase program (QE) as well as upgrades in economic forecasts. The Fed left the policy rate unchanged at 0-0.25% and asset purchases at US$120B per month. The updated median dot plot suggests that no rate hike is...
BOE Preview – Staying Cautious about Brexit Outlook
For QE expansion at the last meeting, we expect the BOE will keep its powder dry this month. BOE should leave the Bank rate unchanged at 0.1%, and the size of asset purchases (QE) at 875 pound. There have been mixed developments since the November meeting. Economic data released...
FOMC Preview – Fed to Update Forward Guidance on QE
At the last meeting of the year, we expect the Fed to be more cautious about the near-term outlook, while more optimistic over the longer-term. The focus of the meeting will be on the adjustment of the forward guidance about the asset purchase program. It will be a qualitative,...
ECB Extends PEPP, APP and TLTROs to At Leaset Until Mid-2022
As promised, the ECB “recalibrated” the existing monetary policy measures at the December meeting. The aim is to ensure that the current level of stimulus remains in presence through to 2020. On the economic projections, the staff revised lower the GDP growth forecast for 2021 but higher for 2022....
BOC Upbeat about Vaccine but Remained Cautious about Slow Global Recovery
As widely anticipated, BOC left all its monetary policy measures unchanged. Policymakers acknowledged the economic recovery since the last meeting. Yet they cautioned about the resurgence in coronavirus cases and the potential impacts on related restrictions on the economic outlook. The central bank welcomed the vaccine news but warned...
BOC Preview: Keeping Powder Dry While Reiterating Stimulus will Last For Years
After the adjustment in asset purchases in October, we expect BOC to keep the powder dry this week, at its last meeting in the year. Policymakers will caution about the rising number of coronavirus cases and economic impacts of tighter restrictive measures, while noting positive news about vaccine. The...
ECB Preview – Policy Recalibration to Focus on PEPP and TLTRO
Given the strong hint in the October meeting, the ECB is prone to add monetary easing measures at Thursday’s meeting. We expect to see increase in the size of PEPP and adjustment of TLTRO. As the policy rates have been staying in the negative territory for years, it is...
RBA Remains Cautiously Optimistic with Better-than-Expected Recovery, Pledged to Do More if Needed
As widely expected RBA left all the monetary policy measures unchanged in December. While acknowledging the “better-than-expected” economic recovery, the members reiterated that the outlook remains dependent on policy support.
On economic developments, the central bank noted that “the economic recovery is under way and recent data have generally been...
RBA Preview: Cautiously Optimistic over Recovery; QE Expected to Increase Further in 2021
After some big moves in November, we believe the RBA will stay put at this week’s meeting. Given the good news about vaccine and the steady decline in the country’s coronavirus cases and, we do not feel surprise if the members turn more upbeat this month.
Economic data released since...
FOMC Minutes: Fed Seriously Considered Adjusting QE
The minutes for the FOMC meeting in November shows that policymakers were cautiously optimistic about the economic recovery and the impacts of the monetary policy tools on the economic outlook. As negative interest rate has been ruled out, the Fed's future policy tool is dependent on asset purchases (QE)....
RBA Minutes Affirm that Future Monetary Policy will Rely on QE
The RBA minutes for the November contained little news. After cutting the policy to a new low of 0.1%, policymakers suggested the policy tool in the future will mainly be asset purchases. While the members remained reluctant to lower interest rates to negative, they might have to follow if...
Chance of Negative OCR Reduces as RBNZ More Confident About Economic Outlook
RBNZ announced that a Funding for Lending Program (FLP) will be implemented in “early December” with an initial size of about NZD 28B. Further details will be announced in coming weeks. The program aims at providing loans to commercial banks at low cost (e.g.: 0.25%). The central bank left...
RBNZ Preview – Introducing New Lending Program with Dovish Tone Maintained
The focus of this week's RBNZ meeting is on details of the Funding for Lending (FLP) program. We expect this program would be implemented before the end of the year and would be the key policy tool of the central bank in the future. Concerning other monetary measures, the...