Fri, May 07, 2021 @ 12:43 GMT
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BOE Predicts Economy to Expand at Strongest Pace since WWII; Announces QE Tapering from this Month

At today's meeting, the BOE voted unanimously to leave the Bank rate unchanged at a record low of 0.1%. Meanwhile, the central bank voted 8-1 to keep the asset purchase program at 895B pound, of which 875B pound is government bonds. Policymakers also announced to slow the pace of...

BOE Preview: Economic Forecasts to be Upgraded, while QE Tapering to Begin in August

At the upcoming BOE meeting, we expect policymakers to vote unanimously to keep the Bank rate unchanged at 0.1%. They would also continue to buy up to 875B pound of UK government bonds and 20B pound of corporate debts. The focus would be on the updated economic projections and...

RBA Keeps Policy Intact but Signals Amendments in July

The RBA left all monetary policy measures unchanged in May and reiterated that a rate hike would "unlikely to be until 2024 at the earliest". However, the central bank upgraded economic projections and signaled that some amendments would be made on yield curve control (YCC) and QE in July. Economic...

RBA Preview: Upgrading Economic Assessment while Pledging to Expand QE Purchases

While the RBA is likely to leave all monetary policy measures unchanged at this week’s meeting, the quarterly Statement on Monetary Policy (due May 7) would be closely watched. We expect policymakers to upgrade economic assessments moderately and pledge to monitor rising home prices. Economic developments have generally improved since...

BOJ Downgrades Inflation Forecasts Significantly as It Struggles with Limited Tools

The BOJ left its monetary policy measures unchanged in April. However, it revised sharply lower the inflation forecasts for this fiscal year. The country’s economy has been far below the +2% inflation despite a decade’s unconventional easing measures. On the economy, the central bank acknowledged that “Japan’s economy has picked...

FOMC Preview – Fed to Deliver Upbeat Message about Economy while Affirming Substantial Progress is Needed to Taper QE

We expect the Fed to turn more upbeat over the economic outlook at this week’s meeting. Yet, the economic improvement is not yet strong enough for any change in the monetary policy measures. As such, the Fed would leave the Fed funds rate target at 0-0.25%. On QE, the...

ECB Expects Growth to Resume in 2Q21. Yet, PEPP Tapering is Still Premature

As we have anticipated, the ECB left all monetary policy measures unchanged in April. Policymakers indicated the current pace (increased since March) of asset purchases in the PEPP would remain intact. Other monetary policy measures will stay unchanged with the Asset Purchase Program (APP) (traditional QE) at 20B euro/...

BOC Tapers QE Program and Delivers Upbeat Economic Outlook

As we have expected, the BOC delivered a hawkish tapering of QE purchases in April. the weekly asset purchases will reduce to CAD3B/week, from CAD4B/week previously. Meanwhile, it also upgraded the economic assessments for both the country and the world. Policymakers now expect the spare capacity to be fully...

ECB Preview – Looking for Hints on PEPP Destiny

We do not expect much news from the upcoming ECB meeting. European yields have stabilized since the central bank “accelerated significantly” the pace of PEPP purchases in mid-March. Inter-meeting economic data have been mixed. We believe policymakers would reinstate that downside risks to the economic outlook in the near-term,...

BOC Preview – Expects Upgrades on Economic Forecasts and More Optimistic Forward Guidance

We expect the BOC to trim its asset purchases to CAD3B/week, from CAD4B/week previously. The reduction is likely driven by lower issuance by the Treasury. It will, however, leave the overnight rate at the effective lower bound of 0.25%. We also expect the central bank to upgrade the economic...

Kiwi Shoots Higher as RBNZ Appears Less Concerned about its Rise

As expected, the RBNZ left all monetary policy measures unchanged at the April meeting. While acknowledging the dampening effects of the government’s housing policy, policymakers need more time to assess the impacts on the real economy. Meanwhile, the members appear more comfortable with the current level of New Zealand...

RBNZ to Leave Expansionary Policy Unchanged as Growth Momentum Eases

Economic developments have been mixed since the February RBNZ meeting. Inter-meeting data show deceleration in the growth momentum, while inflation expectations have soared. Government's measures to curb property prices would be another factors easing the growth outlook, while the Trans-Tasman travel bubble could offer help to pandemic-ridden sectors in...

ECB’s Minutes Revealed that Upside from US’ Fiscal Stimulus Not Yet Reflected in March Forecasts

ECB's minutes for the March meeting have lent support to EURUSD. The minutes revealed that policymakers saw upside risks to the economic outlook, thanks to US’ huge fiscal stimulus. Meanwhile, despite higher inflation in the near-term, it should remain subdued and below the central bank’s target. Policymakers also pledged...

Fed Upbeat on Recovery, while Pledged to Maintain Stimulus Until Substantial Progress is Seen On Economy

The FOMC minutes for the March meeting revealed that members turned more optimistic over the economic outlook. They were more hopeful of continuous improvement in light of the "significant declines in the number of new cases, hospitalizations, and deaths over the intermeeting period as well as a pickup...

RBA Hints to Expand QE In Order to Boost Job and Inflation

The RBA left all its monetary policy measures unchanged in April. The cash rate target stays at 0.1%. correspondingly, the 3-year Australian Government Bond yield target (yield curve control) and the Term Funding Facility (TFF) interest rate also remain at 0.1%. The size QE purchases is kept at AUD100...

BOE Voted Unanimously to Keep Bank Rate and QE Unchanged. Warned of Uncertain Outlook Despite Upbeat Data

The BOE voted 9-0 to leave the Bank rate unchanged at 0.1%. It will also continue to buy up to 875B pound of UK government bonds and 20B pound of corporate debts. While  cautioning that the economic outlook remained highly uncertain, policymakers acknowledged the recent upbeat data, smooth vaccination...

FOMC Review – Fed Revised Economic Projections Significantly Higher, while Pledged to Keep QE Size Unchanged Until Actual Progress is Seen in Economy

The staff significantly upgraded economic projections. While the policy rate will unlikely change before 2024, the median dot plot reveals that more members are now projecting rate hikes in coming two years. As widely anticipated, the Fed left all monetary policy measures unchanged: The size of asset purchases stays...

FOMC Preview – Expect to See Upgrade in GDP Growth Projections

The focus of this week's FOMC meeting is how the Fed would respond to the rising Treasury yields and the rapid improvement in the economic conditions. We expect policymakers to upgrade the GDP growth forecasts and attribute rising yields to improvement economic confidence. Yet, the tone should remain cautious....

ECB to Accelerate Asset Purchase as Rising Bond Yields Tighten Market

While leaving the monetary policy measures unchanged, the ECB indicated that it would increase asset purchases in coming months. The move is a response to the rise of bond yields which could tighten the financial conditions. On economic developments, the central bank attributed the likely contraction in 1Q21 to...

BOC More Upbeat on Economy, Hinted to Taper as Outlook Continues to Improve

As widely anticipated, the BOC left all monetary policy measures unchanged. While being more upbeat about the economic developments, the members noted that the policy rate will stay unchanged as least until inflation target of 2% is "sustainably" achieved. Meanwhile, they hinted of adjusting the size of asset purchases...

ECB Preview – Awaiting Actions in Response to Higher Yield and Revisions on Economic Forecasts

Macroeconomic developments have changed significantly since the January ECB meeting. One of the most prominent developments is the rise in inflation expectations and bond yields. As the ECB has pledged to maintain a accommodative monetary policy, it would be of great interest to the market as to how it...

Fed Powell Cautioned about Uneven Recovery, Pledged to Maintain Stimulus

At the testimony before the Senate, Fed Chair Jerome Powell cautioned that the economic recovery is uneven. He pledged to maintain sufficient support to achieving the employment and inflation targets. Concerning economic developments, Powell refrained from sending a too optimistic message. He affirmed that the recovery highly depends on the...

RBNZ Preview – Policymakers to Sound Less Dovish with Yields and NZD Strengthened

We expect the RBNZ to deliver a less dovish message in the upcoming meeting. Economic data released since the November meeting have been encouraging, with the price level and the job market on track to reach the target. These should lead to upgrades in the economic projections. Financial conditions...

BOE Upbeat about Inflation Outlook. Negative Rate Seems Unlikely although It is Not Ruled Out

As expected, BOE left the Bank rate unchanged at 0.1%. Meanwhile, the QE program also remains at 875B pound worth of government bonds, and 20B pound of corporate debt. The economic projections reveal that policymakers are more optimistic about inflation projecting it to reach the +2% target this year....

RBA Extends Asset Purchases of AUD 100B Until September

RBA announced to extend the asset purchase program by an additional AUD100B as the current program ends in mid- April. Meanwhile, it has turned more upbeat about the global and domestic economic outlook, and upgraded GDP and employment forecasts. RBA turns more upbeat over the global and domestic economic outlook....

BOE Preview – Awaiting Updates on Negative Rate Policy and Economic Projections

There are several things to watch for this week’s BOE meeting: 1) updates on the review of negative interest rate; 2) adjustment to QE; 3) economic projections. All policy measures will stay unchanged this week with the Bank rate unchanged at 0.1%, and the size of the asset purchases...

RBA to Leave Policy Unchanged and Remain Cautious about Outlook Despite Recovery

The RBA will have its first meeting this year on Tuesday, followed by publication of the statement of monetary policy on Thursday. We expect all policy measures to stay unchanged this month. Policymakers could revise GDP forecast higher and the unemployment rate lower, given the better-than- expected economic data...

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...