Central Bank Views
BOE Voted 9-0 to Keep Policy Unchanged. Signaled to Discuss with Regulator about Negative Rate Implementation
BOE voted unanimously to leave the Bank rate unchanged at 0.1%. The asset purchase program also stayed at 745B pound in September. At the meeting, policymakers acknowledged stronger-than-expected recovery in the UK. Yet, they reiterated that the outlook remained highly uncertain as mainly brought about by the coronavirus pandemic....
Fed Shifted to Outcome-Based Forward Guidance, Upgraded Economic Projections
The Fed left the policy rate unchanged at 0-0.25% and the asset purchases program unchanged in September. There are substantial changes in the policy statement, reflecting the formal adoption of average inflation targeting. Updated economic projections revealed a more optimistic outlook for this year through to 2022. The Fed...
AUD Strengthened on Upbeat Chinese Data, RBA Minutes Contained Little News
RBA minutes for the September meeting contained little new information. The members highlighted uncertainty of the economic outlook with lockdowns in Victoria would likely derail Australia’s recovery. Australian dollar is climbing higher at the time of writing this report. However, we believe it is not driven by the minutes...
BOE Preview – BOE to Signal More Easing on Weak Recovery and Brexit Uncertainty
Renewed uncertainty of Brexit talks, sharp selloff of sterling last week and increased speculations of further rate hike have made this week's BOE meeting a closely-watched one. While the central bank is expected to leave the policy rate and QE unchanged at the meeting, we anticipate it to deliver...
FOMC Preview – Policy Incorporating Average Inflation Targeting. New Economic Forecasts and Dot Plots Awaited
After announcing to adopt a new monetary policy framework at Jackson Hole symposium weeks ago, the focus of the upcoming FOMC meeting is on the more clarification of average inflation targeting, the members’ view on the economic outlook (to be revealed in the policy statement and the staff economic...
ECB Upbeat about Recovery, Resorted to Verbal Warning of Strong Euro
ECB left all the monetary policy measures unchanged in September. The staff upgraded the near-term growth outlook, as well as core inflation forecasts for 2021 and 2022, suggesting the central bank's optimism over the recovery. Policymakers continued to stress that risks to growth remain skewed to the downside and...
BOC Left Policy Rate and QE Unchanged, Pledged to Calibrate Measures when Needed
BOC announced to leave the policy rate at the effective lower bound of 0.25% and maintain the pace of asset purchases at CAD 5B/week of Canadian government bonds. While acknowledging that economic activities have rebounded more than expected since the July meeting, the members remained cautious about the outlook,...
ECB Preview – Warning about Euro Strength with No Action Needed
ECB is expected to maintain the monetary policy measures in September. The focuses on the meeting include policymakers’ response to the recent strength in euro, the updated economic projections and ECB’s strategy review after Fed Chair Jerome Powell’s announcement at the Jackson Hole symposium. While euro’s appreciation over the...
RBA Delivered a Mildly Dovish Tone as it Extended TFF and Hinted Further Easing
As widely anticipated, RBA left the cash rate and the 3-year bond yield target unchanged at record of 0.25% at today's meeting. Yet, the decision to expand the size of Term Funding Facility (TFF) and the tone in the accompanying statement have suggested a mildly dovish shift to the...
RBA Preview – Keeping Expansionary Policy Stance with Focus on 3-Year Yield
We expect RBA would leave the monetary policy unchanged in September. Since March, RBA has been adopting a number of measures to lower the borrowing costs and provide liquidity to the market. These include keeping the cash rate at record low of 0.25%, targeting 3- year government bond yield...
Powell Announced Dovish Shift to Fed’s Monetary Policy, Targeting Averaging Inflation and shortfall of Maximum Employment
At the annual Jackson Hole Symposium, Fed Chair Powell briefed the market on the results of the Fed's strategic review of its monetary policy strategy. Powell announced the new approach to deal with price stability and maximum employment, the dual mandate of the Fed monetary policy. The Fed will...
Fiscal Stalemate to Lead to More Fed Stimulus and Further USD Weakness
We expect US dollar's downtrend to resume downtrend in coming months after consolidation. Fiscal stalemate suggests that the Fed would shoulder more burdens in delivering stimulus. This should lead yields to decline further, supporting weakness in the greenback.
Stalled Hopes on Fiscal Stimulus
Failure to strike a deal on a new...
FOMC Minutes Revealed Rigorous Debate over Alternative Monetary Policy Tools
The FOMC minutes for the July meeting revealed that the members remained concerned about the outlook of economic recovery. They had discussed a number of tools for further easing, including forward guidance, asset purchases, and yield curve targets. Meanwhile, the members again stressed that fiscal support is particularly important...
AUDNZD’s Rally on Yield Differential Looks Overextended
Recent strength in Australian dollar has sent AUDNZD to the highest level in 2 years. Notwithstanding the second wave of coronavirus outbreak, and the renewed lockdown measures, in Victoria, Aussie has remained firm. While all major currencies have appreciated in light of the broad-based USD weakness, AUD is the...
RBNZ Preview: Expect QE Size Expansion and More Discussion on Negative Rates
We expect RBNZ to leave the OCR unchanged at 0.25% this week. It will likely increase the size of the Large-Scale Asset Purchase (LSAP) Program (QE) to NZD 80-90B from the current NZD 60B. The accompanying statement would contain a dovish tone, with policymakers discussing more alternative policy tools...
RBA Cautioned over Uneven and Bumpy Recovery amidst Second Wave of Outbreak. Maintained All Easing Measures
At the July meeting, RBA left the cash rate unchanged at 0.25% and maintained yield curve targeting for 3-year bonds at 0.25%. While acknowledging that economic contraction has been less severe than previously anticipated, policymakers left economic forecasts largely intact. The cautiousness was driven by the latest round of...
BOE Preview – Expecting More Hint on Lowering ELB while Near-Term Outlook Might be Upgraded
BOE is widely anticipated to leave the Bank rate unchanged at record low of 0.1% this week. The asset purchase program (QE) will also be maintained at 745B pound. Of most interest in the meeting are the updated economic assessments, discussions on the effective lower bound (ELB) and negative...
RBA to Caution about Economic Impacts of Renewed Lockdown, Relying on Fiscal Policy for Stimulus
RBA will most likely leave all of its monetary policy measures unchanged in August.
The cash rate will stay on hold at 0.25%, the yield curve control program remains targeting 3-year government bonds at 0.25% and the Term Funding Facility will remain in place. However, the officials’ view on the...
Dovish Fed Warned that Recovery Path Dependent on Virus, Pledged to Add More Stimulus when Needed
The Fed sent a more dovish message at the July meeting, although the monetary policy, as well as the accompanying statement, stayed largely unchanged. Despite improvement of data flow, the members warned that the pace of recovery is depending on the developments of coronavirus pandemic. Fed Chair Jerome Powell...
FOMC Preview – Preparing for Changes in Monetary Policy
The upcoming FOMC meeting aims at preparing the market for changes in the monetary policy in September. At the meeting this week, the Fed will keep its policy measures unchanged at this week’s meeting, i.e., the Fed funds rate will stay at 0-0.25%, while asset purchases (QE) will be...