Central Bank Views
RBA Minutes: Risks to Recovery Skewed to Downside as July Meeting Had No Discussion about Impacts of Melbourne’s Lockdown
The minutes for RBA’s July meeting affirmed that policymakers should leave the current monetary measures steady for a prolonged period of time. Policymakers at the July meeting did not discuss about the surge in new coronavirus cases in Melbourne and potential economic impacts of the renewed lockdown measures. We...
ECB: Lagarde Reiterated to Use All EUR 1.35 trillion of Emergency Purchases to Lift Inflation
ECB at the July meeting maintained all the monetary policy measures unchanged. President Christine Lagarde acknowledged the encouraging economic recovery in May and June. She also suggested that the rebound will continue into 3Q20, as supported by monetary and fiscal stimulus. Yet, Lagarde also warned of the high uncertainty...
BOC Pledges to Continue with Easing Until Inflation Returned to +2% Sustainably.
As widely anticipated, BOC maintained both the policy rate and all the asset purchases programs unchanged at the July meeting. While acknowledged positive economic developments since the last meeting, policymakers cautioned that the economy’s recuperation will be slow and pledged to maintain the ultra accommodative monetary policy. They took...
ECB Preview – Sounding Cautiously Optimistic on Economic Recovery
After the big move in June, ECB is likely to keep its powder this month. At this week’s meeting, we expect the central bank to acknowledge the improvement in economic activities, mainly driven by consumption. However, the members will remain cautious, highlighting the high uncertainty and downside risks to...
BOC to Turn More Upbeat about Economic Recovery, While Caution about Uncertainty and Keep Monetary Policy Unchanged.
At the BOC meeting this week, we expect new Governor Tiff Macklem to continue Stephen Poloz’s legacy and leave the policy rate unchanged at 0.25%, the effective lower bound. The asset purchases programs (QE) will also be maintained. Canada’s reopening since the June meeting has largely been smooth. Economic...
BOJ Preview: Maintaining Negative Rates and QE, while Downgrading Economic Forecasts
While we expect BOJ to maintain all of its monetary policy measures unchanged, the central bank would likely downgrade the economic forecasts for FY2020. BOJ’s Tankan survey revealed that companies of all sectors were worse off in 2Q20, sending the sentiment to the weakest level since global financial crisis...
RBA Left Monetary Policy Unchanged. Second Wave in Outbreak Signals Huge Downside Risks
As widely anticipated, RBA left the cash rate unchanged at 0.25%. It also maintained yield curve control, targeting 3-year government bond yield at 0.25%. While the members were more upbeat about the near-term recovery, they remained cautious about the longer-term outlook. The members cited the uncertainty in the coronavirus...
FOMC Minutes: Changes in Forward Guidance and Asset Purchases could Come in September
The FOMC minutes for the June meeting revealed that the members had rigorous discussion about forward guidance, asset purchases and yield curve caps/targets. We expect the framework review will be completed this month, allowing the Fed to announce changes in forward guidance and the asset purchase program at the...
RBNZ Pledged to Expand QE and other Stimulus if Needed, as Risk to Outlook Skewed to Downside
As widely anticipated, RBNZ left the OCR unchanged at 0.25%. The size of QE also stays unchanged at NZD60B. Policymakers acknowledged that the spread ofcoronavirus is under control in the country for now. They also saw reasons for being more confident about the economic outlook. Yet, the central bank...
RBNZ Preview: Cautiously Optimistic about Recovery while Pledges to Do More if Needed
RBNZ is likely to leave the OCR unchanged record low of 0.25% in June. Meanwhile, the size of the LSAP program (QE) will also stay at NZD 60B. Control of the coronavirus pandemic in the country has been more effective than previously anticipated. Policymakers will be more optimistic about...
BOE Expands QE Size, but Slows Pace of Purchases
BOE turned out to be less pessimistic than we had anticipated. The members acknowledged that global economic contraction in 2Q20 will be “less severe than expected”. While the size of QE is expanded, the members will likely slow the pace of asset buying. The policy rate stayed unchanged at...
SNB Intervened Aggressively to Weaken Franc and Pledged to Continue So
SNB left the monetary policy unchanged in June. Meanwhile, the members reiterated the commitment to intervene in the currency market as Swiss franc has remained “highly valued”. Economic and inflation forecasts for this year were sharply downgraded as a result of the coronavirus pandemic and related restrictive measures .
On...
BOE to Expand QE and Discuss Negative Rates
Although there are signs that the coronavirus outbreak in the UK is stabilizing, its economic impact has just been emerged. Record contraction in GDP, sharp slowdown in inflation and weak employment indicators suggest that the BOE would have to maintain a very expansionary monetary policy stance. Together with lukewarm...
FOMC Signals to Increase Asset Purchases in Coming Months
As expected, FOMC left its monetary policy measures unchanged and downgraded the macroeconomic outlook. The members also project that the policy rate will stay unchanged through 2020. The accompanying statement showed few changes. Yet, the pledge to increase purchases by at least their current rate signals that the central...
FOMC Preview – Standing Ready to Add Stimulus Despite Signs of Recovery
While we do not expect any change in monetary policy at the June FOMC meeting, there are a number of things that should be watched for. Chair Jerome Powell will discuss the economic outlook and the monetary policy stance at the press conference. The staff will also release the...
ECB Expands and Extends PEPP, after Sharply Downgrading Inflation
ECB’s increase in stimulus was slightly more than we had anticipated. The move was mainly driven by the sharp downgrade in inflation outlook. The decision has sent a strong message to the market that the central bank is “undeterred” by German constitutional court’s ruling and will continue to adjust...
BOC Turns More Optimistic About Economy, Scales Back Term Financing
Turning more optimistic on the economic outlook, BOC scaled back some term financing facilities, while leaving the policy rate and QE programs unchanged. Policymakers suggested that the impacts of the coronavirus pandemic have peaked, despite ongoing uncertainties.
The members have turned more optimistic about the economic developments. The judged that...
ECB Preview – Lagarde to Expand PEPP and Sharply Downgrade GDP and Inflation Forecasts
We expect ECB to add more stimuli and downgrade it macroeconomic projections at the upcoming meeting. It is likely that the more flexible PEPP will be expanded and extended. Previous meetings suggest that the members are reluctant to lower the deposit rate further. The concerns are mainly the limited...
New BOC Governor to Carry On Legacy, Keeping Rate and QE Intact
The upcoming BOC meeting (June 3) will be the first one headed by incoming Governor Tiff Macklem. We expect him to leave the policy rate unchanged at 0.25%. The unconventional monetary policy, i.e.: QE, will also remain the same. Given the disappointing GDP and inflation data, the accompanying statement...
RBA to Send More Upbeat Economic Assessment in June
We expect RBA to leave its monetary policy measures unchanged in June. Governor Philip Lowe appeared cautiously optimistic about domestic economic outlook. We expect the central bank will deliver a more upbeat economic outlook while pledge to leave the policy rate at record low level for years. The forward...