Archive for January, 2008
FOMC: Monetary easing on fast track
Overview: Following a two-day policy meeting, the Federal Reserve Committee(FOMC) decided last night to cut the fed funds rate by a further 50bp to 3%. This move was widely expected by the markets and among analysts. With yesterdays action, the full amount of easing over the past eight days is adding up to a historic high of 125bp. This leaves little doubt that the Fed has put monetary easing on a fast track.
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FOMC January 29-30, Meeting
· In a decision anticipated by the market, the FOMC cut the fed funds rate by 50 basis points to 3.0 percent · FOMC members stressed that the uncertainty surrounding the outlook remains, and inflation expecattations seem to be well anchored · Overall, we believe that future rate cuts depend heavily on the pace of economic activity There are considerable downside risks to economic growth and there has been no improvement since the last FOMC scheduled meeting in December. In the press release
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Poland: One more hike from the NBP
Just as expected, the Polish central bank (NBP) hiked its key policy rate today by another 25bp to 5.25%. Polish inflation has moved well above the Polish central banks inflation target of 2½% +/-1 percentage point, and therefore it is only natural that the NBP hiked its key policy rate again today. With inflationary pressures remaining strong from both the demand and supply side of the economy, it is likely that the NBP will continue its tightening cycle for some months to come. We expect a
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Slovakia: NBS stays on hold
At todays monetary policy setting meeting, the Slovak central bank (NBS) decided in favour of unchanged interest rates, keeping the key policy rate at 4.25%. This decision was broadly expected by us and consensus, and the market reaction was rather limited.
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FOMC: Preview of policy meeting
Overview: On Wednesday night at 20:15 CET the Federal Open Market Committee (FOMC) will announce its policy rate decision. Following the 75bp inter-meeting easing last week, markets have currently settled with 86% probability of a 50bp cut at the upcoming meeting. We doubt that the FOMC has any desire of disap-pointing in the current environment, and expect a further cut by 50bp to 3.00% at Wednesdays meeting. However, if equity markets recover significantly ahead of the meeting, the risk is
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Federal Open Market Committee, January 29-30
· The Fed is willing to act decisively to maintain orderly functioning in financial markets, and thus lower the risk of a sharper slowdown in economic activity · As a consequence of this strategy, FOMC will continue lowering the fed fund rates in the coming months The FOMC lowered the fed funds rate by 75 bp last Tuesday, in a “decisive” action that could have been in the cards during the meeting ending on January 30, as the economic outlook deteriorated in previous months and “appreciable
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Brazil: Copom stands united
The Banco Central do Brasil (BCB) yesterday kept its benchmark SELIC lending rate at 11.25%, which was fully in line with market expectations. The bank's monetary policy committee, known as the Copom, voted unanimously to leave rates unchanged. After 18 consecutive cuts which have brought the SELIC rate from 19.75% to 11.25% the BCB has been on pause over the last three Copom meetings, and so it has thereby ended a more than two-year cycle of monetary easing.
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UK Interest Rates, Money Supply and Inflation 2008
The US Fed's emergency 0.75% interest rate cut to 3.5% following the global stock market plunge on fears of a looming US recession now increases the probability of a near certain cut in UK interest rates at the February MPC Meeting, rather than at the originally forecast March MPC meeting. Whilst the US has made deep cuts in interest rates from a peak of 5.25% to 3.5%, the UK has only cut rates by 0.25% from a peak of 5.75% to 5.50% with the expected February cut to take rates to 5.25%. The
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US: New Fed forecast
Overview: Yesterdays inter-meeting cut by 75bp, see our `FOMC: Aggressive cut by 75bp to 3.5%´ note, signals that the FOMC is extremely worried about the current situation. To us, the event illustrates that the preferences of the FOMC imply an even stronger commitment to insure against adverse economic scenarios. On this background, we have revised our Fed call. The new forecast implies that the Fed funds target is reduced to 2% by the 25 June meeting. Details: The FOMCs decision yesterday
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US: The Fed Slashes The Funds Rate 75 Basis Points
The Federal Reserve Board moved boldly this morning to calm global financial markets slashing the federal funds rate by 75 basis points to 3.50 percent. While the deterioration in global markets forced their hand today, the Fed is not done. We still expect an additional half point cut in the funds rate at the January 29/30 FOMC meeting.
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