Archive for November, 2008
Poland: NBP cuts key policy rate by 25bp
The Polish central bank's (NBP) monetary policy council (RPP) decided at its meeting today to cut the key policy rate by 25 basis points to 5.75%. Our and the consensus expectation was for an unchanged rate. Nevertheless, today's decision to cut the key policy rate can only be seen as a minor surprise.
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China: Cut in interest rates
The Peoples Bank of China (PBoC) today surprisingly cut both its benchmark lending and benchmark deposit interest rates by 108 bp to 5.58% and 2.52% respectively. In addition the reserve requirement ratio (RRR) for smaller commercial banks was cut by 200 bp to 14% and the RRR for major banks was cut by 100 bp to 16%. The size of the interest rate cut was a surprise. Our expectation has been that the lending and deposit rate would be cut four times during the next six months, bringing us back
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China: Cut in interest rates
The Peoples Bank of China (PBoC) today surprisingly cut both its benchmark lending and benchmark deposit interest rates by 108 bp to 5.58% and 2.52% respectively. In addition the reserve requirement ratio (RRR) for smaller commercial banks was cut by 200 bp to 14% and the RRR for major banks was cut by 100 bp to 16%. The size of the interest rate cut was a surprise. Our expectation has been that the lending and deposit rate would be cut four times during the next six months, bringing us back
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Central bank cut the base rate by 50bp to 11.00%
The monetary council surprised the markets today by cutting the base rate by 50bp, to 11.00%, after the emergency 300bp rate hike carried out in October. In addition, it has been announced as well that the mandatory reserve requirement was cut to 2% from 5%. The statement of the council will be available at 14.30.
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Will the Fed Follow in Canada’s Footsteps?
The Bank of Canada cut interest rates by 25bp to 2.25%. This move was smaller than the market expected but still represents 75bp of easing since the beginning of the month. With the Federal Reserve set to reduce interest rates next week, Canada's explanation for the smaller could shed some light on what the Fed may be thinking. According to the BoC statement, Canada opted for only a 25bp rate cut for 3 reasons: 1. They have already cut interest rates aggressively this month 2. Even though they
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Japan: BoJ leaves interest rates unchanged
The Bank of Japan (BoJ) as expected left its leading O/N target rate unchanged at 0.3% in a unanimous decision by its board members. In its statement the BoJ said that the economy has been increasingly sluggish. In addition it stressed the increasing downside risk due to both bleak outlook for he global economy and financial conditions in general. On the other hand, the BoJ believes that upside risk on prices has decreased.
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Hungary: NBH rate decision
Central bank kept the base rate on hold at 8.50% In line with market expectations, the monetary council kept the base rate on hold at 8.50% today. The statement of the council will be available at 14.30
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Fed expects the economy to contract moderately in 2H08 and 1H09
FOMC Minutes October 28-29th 2008 Fed expects the economy to contract moderately in 2H08 and 1H09 and to overall grow at around zero in 2009 Some participants saw risks to the downside on inflation We expect an additional rate cut on December 16th, 2008 The staff reduced its forecast for economic activity in 2H08, 2009 and 2010. It expected GDP to contract in 4Q08. Moreover, it predicted “that real GDP would continue to contract somewhat in the first half of 2009 and then rise in the second
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EMU: Growth now, stability later…
● The dramatic worsening of the growth outlook throughout the eurozone has strengthened the call for fiscal stimulus, particularly suited to support activity at a time in which monetary policy risks being less effective than usual. ● Next year, budget deficits in the area’s largest economies will increase significantly, due to the effect of both automatic stabilizers and discretionary fiscal measures. A generalized breach of Maastricht criteria is in the cards, but we don’t see this as a
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Turkey: Reckless and dangerous rate cut
In a move which took everyone, ourselves included, by complete surprise, the Turkish central bank (TCMB) on Wednesday cut its key policy rate (the borrowing rate) by 50bp to 16.25%, and its less important lending rate by 100bp to 18.75%! We are very surprised by the bank's decision which we regard as a reckless and dangerous move likely to send the Turkish lira plummeting.
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