Archive for June, 2008
Norway: Unchanged policy rate from Norges
As widely expected, Norges Bank kept the policy rate unchanged today at 5.5%. Ahead of the announcement all focus was on whether Norges Bank would flag a June hike by saying that it had considered or discussed rising rates. The central bank did not pre announce a June rate hike. Furthermore, at the press meeting, Governor Gjedrem added that there were not two alternatives on the table today – only unchanged rates. Hence, the press release was in fact quite close to our expectations; we looked
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Poland: Unchanged, but for how long?
Today the Polish central bank (NBP) kept its key policy rate unchanged at 5.75% in line with the consensus expectation and our expectation. That said, some analysts had expected a rate hike and a roughly 50% chance of a 25bp hike had been priced in the market, so to some players it most have been a “disappointment” that the NBP kept rates unchanged. For the second month in a row the NBP has kept its rates unchanged after initiating the monetary policy cycle mid-2007. However, there is no doubt
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Expectations of meeting at Norges Bank
Interest-rate announcement JB expectations: unchanged rates at 5.50% Market expectations: unchanged rates • In favour of unchanged interest rates: • The housing market has weakened • Slowing Norwegian and global growth • High money-market rates do some of the work for Norges Bank • In favour of an interest-rate hike: • Inflation is on the increase • Inflation expectations are high • The labour market is tight
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Japan: BoJ leaves interest rate unchanged
As widely expected Bank of Japan (BoJ) left its leading interest O/N target rate unchanged at 0.5% in a unani-mous decision. In addition, BoJ left its view of the economy broadly unchanged in the Monthly Economic Report published in connection with todayÂ’s monetary meeting (see page 2). Overall there have been no major changes in BoJÂ’s view of the economy despite the recent spike in inflation, see Flash Comment - Japan: Out of deflation - we raise our inflation forecast and the surprisingly
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After the ECB meeting: Hawks spread wings
European Central Bank did not change interest rates, and this is hardly surprising. There must be, however, many disappointed faces (including the Italian Prime Minister Silvio Berlusconi) who had hoped for at least a vague sign of the future monetary easing. Nothing of that kind. President Trichet once again pointed to the threat of persistent high inflationary expectations, stemming from a combination of supply shocks and tight labor market conditions. Moreover, he shrugged off the recent
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Czech Republic: No surprises here, rates on hold
As expected the Czech central bank (CNB) today decided to keep its key policy rate unchanged at 3.75% despite the significant rise in inflation in recent months. There is no doubt that the acceleration in the strengthening of the Czech koruna since mid-2007 frustrates the majority of the CNB board members, which is most likely the main reason why the CNB today decided to keep interest rates on hold despite the fact that inflation now running at 7.1% y/y (March) is well above the CNB's
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FOMC Decision: Gliding To Neutral, One Last Easing
Today the Fed lowered its target federal funds rate by 25 basis points to 2.00 percent. The move was expected by the markets. Yet the Fed also kept its options open as evidenced by their concerns about growth and liquidity. The Fed's bias to ease remains in place with concerns on credit, housing and labor markets. Inflation remains secondary.
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Slovakia: Interest rates stayed unchanged in line with expectations
Slovak central bank kept official interest rates unchanged today , in line with our and the widespread expectations of the market. The 2W repo rate stays at 4.25%, while O/N corridor remained at 2.25/5.75%. Press conference with Bank Board members will follow at 12:30 CET. New quarterly prognosis should be also published later in the day. The economic outlook and inflation forecasts spoke in favour of stable interest rates also this month, while strong koruna guaranteed tight monetary
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FOMC: Neutral, with rising inflation concerns
Overview: At the monetary policy meeting on Wednesday, 25 June, the Federal Open Market Committee (FOMC) decided to leave the fed funds rate unchanged at 2.00%. The decision was not unanimous, as Dallas Fed President Fisher voted for a rate hike. The committee adopted a relatively neutral stance; the accompanying statement suggested more concerns about inflation and slightly fewer concerns about growth. We think it fair to say that the language leaned slightly toward the risk of inflation.
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First Line of Defense: Hawkish Wording
• The Fed maintained its target rate at 2%. But the statement was hawkish in tone, in line with recent speeches of Board members • FOMC is now more concern with risks to inflation than with risks to the growth outlook • While we expect a pause in its next meeting August 5th, the Fed will not hesitate to act if inflationary pressures increase further or if inflation expectations continue to deteriorate Inflationary Risks continue to rise, while growth drags. The Federal Open Market Committee
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