Central Bank Watch

Today’s FOMC Statement on Monetary Policy – Analysis

January 30, 2019

Today’s statement¬†accelerated the shift in forward guidance rate directionality away from a one-sided risk toward less accommodation and greater normalization by introducing an element of two-sided risk and less certainty about the timing and number of increases if such should be deemed appropriate. The prior statement on December 19 had added the bolded word “some” […] More

FOMC Preview

January 30, 2019

The first rule of Federal Reserve chairmen when wearing their communicator-in-chief hat is to do no harm.¬†Chairman Powell failed that test at December’s press conference by placing a very positive spin on U.S. economic trends and appearing not to back away from a baseline expectation that the a couple more interest rate hikes in 2019 […] More

National Bank of Hungary

January 29, 2019

Although leaving Hungary’s central bank base rate (0.90%) and overnight deposit rate (-0.15%) unchanged at their cyclical lows, officials at Magyar Nemzeti Bank are now contemplating a policy trend reversal, affecting both its quantitative stimulus and these key interest rates. The Monetary Council is prepared for the gradual and cautious normalization of monetary policy, which […] More

ECB Governing Council Recognizes More Difficult Outlook but Keeps Policy Signals the Same

January 24, 2019

The takeaway from today’s ECB Governing Council statement is that “incoming data have continued to be weaker than expected as a result of a slowdown in external demand compounded by some country and sector-specific factors.” Officials are not in denial and explicitly consider the risks associated with their baseline outlook to be skewed to the […] More

Bank of Japan Board Cuts Projected Inflation but Leaves Monetary Stance Unchanged

January 23, 2019

This week’s two-day BOJ Board meeting ending today coincided with the publication of a new quarterly Outlook for Economic Activity and Prices. These reports convey changes in projected GDP growth and core CPI inflation, which excludes perishable foods. The table below compares the latest forecasts identified in rows labeled GDP-JAN with earlier ones made in […] More

Central Bank Rates in Turkey, Indonesia and South Africa Left Unchanged

January 17, 2019

The weaker global inflationary outlook has reduced lessened the risk of imported inflation and capital outflows that might caused by tighter monetary policy in the United States and other industrialized economies. The last central bank interest rate changes in Turkey, Indonesia, and South Africa had been upward, but officials at all of them held policy […] More

Bank of Canada: No Rate Change but Tighter Forward Guidance than Predicted

January 9, 2019

Canadian monetary policy remains in a tightening cycle intended to converge on rate neutrality. There have already been five 25-basis point hikes of the overnight rate target beginning in July 2017 and with follow-up moves in September 2017, then January, July and October of 2018. The big decline in the global price of oil resulted […] More

Bank of Israel Leaves Interest Rate Unchanged

January 7, 2019

The Bank of Israel Monetary Committee reviewed its monetary policy stance for the first time since a 15-basis point interest rate hike announced in late November to 0.25%. That increase had been the first change 3-3/4 years and reversed a cut of same size in February 2015, which had culminated a 310-basis point easing cycle […] More

Bank of Mexico Tightens for Fourth Time in 2018

December 20, 2018

A 25-basis point increase in Mexico’s overnight interbank rate to 8.25% announced today¬† brings the cumulative increase this year to a full percentage point, which matches what the Fed did this year and keeps the premium relative to the federal funds target at a very wide six percentage points. Aside from earlier hikes this year […] More

First Swedish Monetary Policy Rate Hike since 2011

December 20, 2018

The Swedish Riksbank Executive Board raised its repo rate from -0.50% to -0.25%, marking the first rate hike since July 2011 and the first change since a 15-basis point cut in February 2016. The rate has been zero percent or lower since October 2014. A statement from the Board doesn’t anticipate another rate hike until […] More