New Overnight Developments Abroad - Daily Update
Stronger Yen
January 23, 2015
Saudi Arabian King Abdullah has died. Former Crown Prince Salman is the new king. The dollar has depreciated 0.8% against the yen while rising 0.9% versus the Aussie dollar, 0.5% relative to the euro, 0.3% vis-a-vis the yuan, 0.2% against the kiwi and 0.1% versus the loonie and Swiss franc. Sterling is 0.1% firmer against […] More
Central Bank Watch
European Central Bank Policymakers Pull the Trigger on Quantitative Easing
January 22, 2015
The ECB today announced a decision to begin buying in March sovereign and private-sector bonds at a pace of EUR 60 billion per month. Officials took this controversial action, not favored by all, in response to lower-than-expected inflation, weaker-than-desired money and credit growth following earlier initiatives including long-term loans of cheap credit to banks, an […] More
Central Bank Watch
Central Bank of Brazil
January 22, 2015
Brazil has several sizable economic imbalances. Inflation of 6.4% in the year to December is hovering around the top of the 2.5-6.5% target range in spite of the dive in global oil prices. GDP contracted marginally between the third quarters of 2013 and 3Q14. The current account and fiscal deficits are excessive, constituting around 4% […] More
New Overnight Developments Abroad - Daily Update
More Monetary Policy Changes
January 22, 2015
Yesterday it was the Bank of Canada. Today, the ECB Governing Council announced plans to begin buying EMU member sovereign debt bonds and private sector bonds in March. EUR 60 billion of assets will be bought each month in this quantitative policy initiative and continue through September of 2016. In any case, the program will […] More
Central Bank Watch
Bank of Canada Cuts its Main Interest Rate
January 21, 2015
Canada’s overnight money rate target was cut by 25 basis points to 0.75%. Officials acknowledged some undesirable yet unavoidable surprise to markets in this decision, which is a response to an unambiguously negative impact on Canada of the recent plunge in oil prices. Today’s rate change was the first since the third of three 25-basis […] More
Central Bank Watch
Bank of Japan Puts Up a Good Front
January 21, 2015
The BOJ Board was not expected to change is quantitative monetary stimulus settings (QQE), and it didn’t surprise in that regard. Less than three months ago, planned annual JGB purchases were increased from 50 trillion yen, which had been the plan since April 2013, to JPY 80 trillion, and the targeted average maturity of JGB […] More
New Overnight Developments Abroad - Daily Update
Spotlight on Central Banks
January 21, 2015
In response to disinflationary implications of the plunge in oil prices, the Bank of Canada cut its overnight money rate target to 0.75% from 1.0%. Oil price changes also pose downside risks to growth, which is projected to fall to around 1.5% in the first half of this year, and to financial stability. The prior […] More
Central Bank Watch
Central Bank of the Republic of Turkey Cuts Main Interest Rate to 7.75% from 8.25%
January 20, 2015
Monetary officials were not expected to extended monetary easing, which had been paused since August, quite this soon, and the overnight borrowing and lending rates of 7.5% and 11.25% were not also adjusted at this time. A released statement expresses more optimism about CPI inflation, which fell to 8.17% last month from nearly 9%, noting […] More
New Overnight Developments Abroad - Daily Update
Chinese GDP and a New Drop in Oil Prices
January 20, 2015
Chinese GDP recorded on-year growth of 7.3% last quarter, 7.3% in the second half of 2014, and 7.4% for the full calendar year. 2014 growth was the slowest since 1990 and below the government’s target for the first time years. Other Chinese data released today showed Industrial production rising at a 3-month high of 7.9% […] More
New Overnight Developments Abroad - Daily Update
A Difficult Day for Stocks in China and Hong Kong
January 19, 2015
Global financial markets last week were convulsed by a profound and unexpected change in Swiss currency policy. With the United States closed for Martin Luther King Jr’s birthday, another policy-induced bout of turmoil hit the stock markets of China and Hong Kong, which respectively tumbled 7.7% and 1.5%. The former drop was the greatest since […] More
