Central Bank Watch
Central Reserve Bank of the Republic of Turkey Eases Again
July 20, 2016
The unsuccessful coup in Turkey did not restrain Turkish monetary policymakers from taking another step in their campaign to narrow the overnight lending/borrowing interest rate corridor by cutting the lending rate but leaving the deposit rate unchanged. The latest 25-basis point borrowing rate reduction brings the cumulative decline of such to 200 basis points since […] More
Central Bank Watch
Brazilian Selic Rate Kept at Restrictive 14.25%
July 20, 2016
Between October 2014 and July 2015, Brazilian monetary policymakers increased interest rates by 325 basis points, but a year has now passed since policy has changed. Under a new governor of the Central Bank of Brazil, the key Selic interest rate was left at 14.25% despite a half-percentage point reduction of consumer price inflation to […] More
Central Bank Watch
Central Reserve Bank of Peru
July 15, 2016
Late yesterday came the as-expected announcement that Peruvian monetary authorities decided once again to keep they main interest rate at 4.25%. Inflation had accelerated last year, in part because of a double-digit depreciation of the sol, and this had prompted four 25-basis point central bank rate increases that were implemented in September, December, January and, […] More
Foreign Exchange Insights and Next Week
Next Week
July 15, 2016
Central Banks: Interest rate policies are scheduled at the European Central Bank and in Brazil, Indonesia, Turkey, and South Africa. ECB President Draghi will hold a press conference after Thursday’s Governing Council meeting, and the Reserve Bank of Australia minutes from this month’s meeting will be released. Holidays and Special Events: Japan will be closed […] More
New Overnight Developments Abroad - Daily Update
Upbeat Chinese and U.S. Data Overshadow the Terrorist Attack in Nice
July 15, 2016
Chinese GDP, retail sales, and industrial production exceeded analyst expectations and suggest that economy’s slowdown is leveling off. Real GDP growth accelerated to a quarter-on-quarter increase of 1.8% in the second quarter, keeping on-year growth steady at 6.7% instead of slowing further as analysts were expecting. Industrial production posted a 6.2% on-year advance in June […] More
Deeper Analysis
Currency Determination at the Intersection of Economics and Politics
July 14, 2016
Contrary to popular opinion, politics and economics do not operate in separate universes. Politics is the business governing who gets to make the rules for all other business activity and how the laws will be enforced and interpreted. Politics determines policy, and abrupt changes in policy and policy communication influence economic performance profoundly. That’s why […] More
Central Bank Watch
Bank of England Defers Policy Easing to August
July 14, 2016
The dominant market expectations earlier this week had been that the Bank of England’s Bank Rate, which has been at 0.50% since March 2009, would be cut at today’s meeting. An expansion of quantitative easing was also thought likely. The GBP 375 billion ceiling on the asset purchase program was reached in late 2012. These […] More
Central Bank Watch
Bank of Korean Base Rate Kept at 1.25%
July 14, 2016
A fifth 25-basis point interest rate cut since August 2014 had been implemented at the June monthly policy review, so it’s not surprising that Bank of Korea officials chose to leave the Base Rate steady this time at 1.25%. In a released statement, Board members predicted modest domestic demand-led growth with considerable uncertainty surrounding that […] More
New Overnight Developments Abroad - Daily Update
Surprise, Surprise, Surprise!
July 14, 2016
Surprise #1: Latest U.S. presidential opinion polls show the race between Trump and Clinton too close to call in key swing states, despite much greater political ad spending by the Democrats. Trump said he will unveil his VP choice Friday at 11:00 am EDT. Surprise #2: Rising from the ashes, Boris Johnson was named British […] More
Central Bank Watch
Bank of Canada Leaves Policy Unchanged
July 13, 2016
Canada’s overnight money rate target has been 0.50% since two 25-basis points cut last year implemented in January and July. Monetary officials retained the 0.50% rate but lowered projected GDP growth this year to 1.3% and pushed back slightly the expected timing when the negative output gap, which depresses inflation, will disappear to the end […] More
