Central Bank Watch

Reserve Bank of Australia Keeps Existing Monetary Policy Unchanged

April 6, 2021

Australia’s Official Cash Rate had been cut three times last year, twice in March by a total of 75 basis points and most recently by a further 15 bps in November to a record low of 0.10%. That level was retained at today’s monthly policy review by the Reserve Bank of Australia Board. So were […] More

Bank of Japan Modifies Policy but Characterizes such as “Furthr Effective and Sustainable Monetary Easing”

March 19, 2021

Long before the pandemic, the Bank of Japan had significantly modified the framework of its highly accommodative monetary easing in September 2016 and renamed the program Quantitative and Qualitative Easing with Yield Curve Control. Policy focus was shifted away from money growth to a more targeted effort to ensure a positive output gap, flatten the […] More

Bank of Russia Tightens Unexpectedly

March 19, 2021

The Central Bank of Russia became the third monetary authority this week to raise its key interest rate in response to accelerating and above-target inflation, but unlike the tighenings in Brazil and Turkey which were merely larger than anticipated, Russia’s hike to 4.5% from 4.25% had not been expected. A statement from the Board of […] More

Brazilian Selic Rate Hiked to 2.75%

March 18, 2021

As in Turkey, monetary policymakers at the Central Bank of Brazil out-tightened market expectations. The Selic interest rate was raised by 75 basis points, not 50 bps as forecast, to 2.75% in the first hike of any sort since 2015. The rate had been cut five different times last year from February through August by […] More

Two Percentage Point Central Bank Rate Hike in Turkey

March 18, 2021

One currency to buck the downward trend of most currencies versus the dollar has been the Turkish lira, which has rebounded about 2% in response to a greater-than-expected 200 basis point increase in the Central Bank of Turkey’s one-week repo rate. Turkish CPI inflation has climbed to 15.6%. At 19%, the central bank interest rate […] More

FOMC Statement, Projections, and Press Conference

March 17, 2021

The FOMC voted unanimously (11-0) to retain the 0 to 1/4 percent federal funds target and continuing quantitative stimulus (purchases of at least $80 billion per  month of Treasury bonds and at least $40 billion of agency mortgage-backed securities. Forward guidance was not modified but the released statement did tweak its projections. Growth conditions were […] More

FOMC Preview

March 17, 2021

Since the last FOMC meeting seven weeks ago, investors have embraced riskier assets. The 10-year Treasury yield is 67 basis points higher now than then, and the DJIA is up 7.7%. The price of West Texas Intermediate crude oil has soared 21%, while gold has weakened 6.5%.  the dollar has risen 5.0% against the yen,  […] More

ECB Maintains Interest Rate Levels and Forward Guidance and Announces Near-Term increase in Pace of PEPP Bond Buying

March 11, 2021

This week’s monetary policy review by the Governing Council of the European Central Bank left the interest rate structure unchanged, with a zero percent refinancing rate flanked by a negative 0.5% overnight deposit rate and a +0.25% rate on the marginal lending facility. Euroland has been less successful than many other places rolling out Covid-19 […] More

Bank of Canada Reaffirms Existing Monetary Policy Settings

March 10, 2021

When the pandemic struck a year ago, the Bank of Canada’s Governing Council compressed the reduction of its overnight policy rate into a trio of 50-basis point cuts all in March to the record low of 0.25%, which it considers an “effective lower bound.” Additional stimulus has been provided by a program of asset purchases. […] More

Central Bank Rate Hike in Ukraine Wasn’t Expected

March 4, 2021

Above-target inflation in Ukraine inspired officials at the National Bank of Ukraine to hike their policy interest rate by 50 basis points to 6.5%. The move was unexpected and the first tightening since a 50-basis point advance to 18.0% in September 2018. Officials had eased five times by a total of 450 basis points in […] More