Sun, Feb 16, 2020 @ 23:05 GMT
The Fed could make a number of changes in the upcoming June FOMC meeting, to pave way for a rate cut in as soon as July. We would focus on three things: updated economic projections, adjustment in the forward...
FOMC left the policy rate unchanged at 2.25-2.50% but with one dissent. St Louis Fed President James Bullard voted against the decision as he proposed to cut the rate by -25 bps. The dot plot projections show that more...
Swiss franc's depreciation against Euro over the past few months has offered some reliefs to policymakers. At the quarterly SNB meeting in September, the members acknowledged the franc is not as overvalued as before. Yet, weak economic and inflation have led the members to remain cautious and maintain the monetary policy unchanged. SNB this month decided to keep the sight deposit rate unchanged at -0.75%, while the target range for the three-month Libor stayed at - –1.25% and –0.25%. The central bank also reiterated the pledge that it would intervene in the foreign exchange market if needed. But, SNB's sight deposit and FX reserve data indicate that less intervention has been adopted recently.
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...
SNB left the policy rate unchanged at -0.75% in December. Again, the members reiterated the commitments to intervene in the currency in order to curb the appreciation of Swiss franc, which is described as “highly-valued”. They also affirmed to...
The FOMC minutes for the January meeting were a hawkish one. Many members expressed the view that it would be 'appropriate' to increase interest rate again 'fairly soon'. A few of them suggested removing policy accommodation in 'a timely manner'. However, there was no indication that it should arrive in as soon as March. Indeed, more clarity on the fiscal stimulus plan is needed before the members could decide on the timing of the rate hikes. While the general outlook to the economy remained upbeat (the description on the employment market was especially constructive),'a few' members were concerned about downside risks to the inflation outlook.
Recent comments from US Treasury Secretary Steven Mnuchin and Senate Majority Leader Mitch McConnell appeared to have lifted market confidence that the government will eventually be able to raise the debt ceiling and avoid default. While our base case is that a debt ceiling would be suspended or raised, and the government would avoid a shutdown, we do not expect things to go smoothly and it would likely be a last-minute deal. US' politics has been under the spotlight since Donald Trump has become the president. At over 200 days in office, Trump's Russia scandal probably caught most attention, followed by the war of words with North Korean leader Kim Jongun. More recently, Trump dissolved several business advisory councils after resignations of a number of CEOs. On economic achievement, Trump has failed to pass the healthcare reform bill and was unable to kick start any pro-growth or tax policy. The government's debt issue is close watched and volatility of the stock markets could increase as we approach the deadline.
At the meeting later in the week, BOE would most likely leave the Bank rate unchanged at 0.75%. It would also keep the purchases of gilts and corporate bonds remain at 435B pound and 10B pound, respectively. BOE sounded...
As widely anticipated, RBNZ left the OCR unchanged at 1.75% and maintained the neutral bias in the monetary policy stance. Domestic economic developments remained upbeat with rising inflation and positive growth outlook. Policymakers attributed weaker-than-expected 4Q17 GDP to temporary factors. The central bank acknowledged the recent depreciation in trade-weighted exchange rate. Yet, it reiterated that a weaker kiwi would be needed for more balanced growth. RBNZ warned that geopolitical uncertainty remained the biggest challenge in the global economic development. We expect RBNZ would stand on the sideline throughout the year.
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...
The FOMC minutes for the June meeting revealed that the members were confident over the growth and inflation outlook, although they acknowledged intensifying trade conflicts. There were discussions over the term structure of interest rates. While many of them...
BOE voted 7-2 to keep the Bank rate unchanged at 0.5% in May. The members voted unanimously to leave to asset purchase program unchanged at 435B pound. As we had mentioned in the preview (https://www.actionforex.com/action-insight/central-bank-analysis/92835-boe-could-be-more-dovish-than-hawkish-hold/), BOE’s message turned out...
BoC has sent a mixed message in yesterday's statement. Although the next rate adjustment remains a hike, the timing remains data-dependent and hinged on a number of uncertainties, including NAFTA negotiations and geopolitical tensions, something critical to Canada due...
The RBA minutes for the October meeting reinforced its cautious stance on the monetary policy. With the cash rate unchanged at 1.5% for 24 consecutive months, the members have seen no urgency to make adjustment. While affirming the next...
Talks of ECB's tapering have been looming of late, thanks to Eurozone's improving economic developments, especially in Germany, adverse effects of negative deposit rates on financial institutions, bigger-than-expected targeted longer-term refinancing operations (TLTROSs) take-up last week, as well as the asset buying program's ongoing deviation from its capital key. Bundesbank president Jens Weidmann has been vocal about less expansionary policy and a review to the forward guidance, while other members of the Governor Council reiterated the need to maintain accommodative measures to boost inflation.
RBA’s minutes for the August meeting indicated that future monetary policy action would be data-dependent. While acknowledging some improvements in the economic developments after the two consecutive rate cuts, spare capacity in the labor market remained significant. The country’s...
RBNZ’s August statement comes in more dovish than we had anticipated. While leaving the OCR unchanged at 1.75%, the members pushed backward expectations for the next interest rate adjustment. Moreover, they pushed back the timing for inflation to reach...
Following two consecutive rate cuts, RBA is widely expected to leave the cash rate unchanged at 1% in August. Incoming economic data since the last meeting have also supported the pause. Yet, given the aggressive target in the longer-term...
The FOMC minutes for the March meeting reinforced the members’ confidence over the economic growth outlook and that inflation would return to the +2% target in the medium-term. The confidence was mainly driven by the tax reform plan passed...
The Fed finally made formal announcement that it would begin normalizing the balance sheet in October. As indicated in June, the process does not involve active selling of securities, but a passive run-off of its holdings. The policy rate also stayed unchanged at 1-1.25%. The overall tone of the statement and the press conference came in more hawkish than expected. Depsite downward revision in the core CPI for this year, the staff upgraded the economic growth outlook and downgraded the unemployment rate forecast. The median dot plot continued to project one more rate hike this year, followed by three more increases in 2018. As CME's 30-day Fed funds futures suggested, bets for a December hike markedly jumped to 73.4% from 57.7% in the prior day.
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