Archive for April, 2009
South Africa: SARB cuts by 100bp
As expected the South African Reserve Bank (SARB) today cut its key policy rate by 100bp to 8.50% We expect SARB to cut its key policy rate to 7.50% over the next 12 months. Details Totally as expected, SARB today cut its key policy rate by 100bp to 8.50%. Assessment & Outlook SARB governor Tito Mboweni cited sluggish domestic demand as a key reason for the rate cut and in general sounded a dovish tone that signals further monetary easing going forward despite the fact that inflation
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The FOMC acknowledged signs of stabilization
Target rates of 0%-0.25% are maintained Signs of stabilization in the economy but activity will remain weak for some time Downside risks to inflation continue The FOMC decided to maintain its target interest rate at 0% to 0.25%. In the intermeeting period, the economy continued to contract “though the pace of contraction appears to be somewhat slower.” Household spending, in particular, has shown signs of stabilization, which is demonstrated by today’s positive PCE results. The overall message
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FOMC January Meeting: Exploring New Territory
For the Federal Open Market Committee (FOMC), the two objectives of financial stability and economic recovery remain the intermediate-term policy targets. Yet, both targets are a distance away from being reached. The longer-term goal is, of course, price stability with sustainable real economic growth. To promote financial stability the FOMC retained its 0 to 25 basis point target range for the federal funds rate. In addition, the Fed is committing to a continued expansion of its balance sheet
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FOMC statement/Bank stress test results May 4th
The run-up in US equities and selloff of the USD in front of Wednesday’s FOMC meeting seemed to be partly fueled by speculation that the Fed would elect to increase its asset purchase program and speculation that next week's US bank stress test results will show that most major US banks have enough capital to weather future losses. The Fed reaffirmed its commitment to its current asset purchase plan and indicated that the pace of the US downturn has slowed. In its policy statement, the FOMC
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Czech Republic: CNB keeps interest rates on hold
The Czech central bank (CNB) left interest rates unchanged at its monetary setting meeting today, leaving the key policy rate at 1.75%. The decision was widely expected and therefore should not come as a surprise to the market with the Czech koruna and yields moving only moderately on the back of the announcement. Despite the sharp drop in Czech economic activity supporting further loosening of monetary policy, the Czech central bank has made it very clear through several verbal interventions
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Norway: Dovish Norges Bank
Norges Bank today slashed its policy rate by 50bp to 2.0%, which was in line with consensus expectations. Hence, the more interesting piece of news was the new Monetary Policy Report and the press release. In the press release Norges Bank said: "The Executive Board's strategy is that the key policy rate should be in the 1-2% range in the period up to the publication of the next Monetary Policy Report on 17 June 2009, unless the Norwegian economy is exposed to new major shocks. The analysis in
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US: Implications of the FOMC’s Announcement for the Dollar
The FOMC’s announcement today that it will purchase U.S. Treasury securities led to significant declines in Treasury yields that undermined support for the dollar. The greenback probably will weaken further, at least in the near term, versus most major currencies. FOMC’s Announcement Lead to Marked Decline in Treasury Yields The Federal Open Market Committee (FOMC) announced its intention today “to purchase up to $300 billion of longer-term Treasury securities.” In addition, the Fed will
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FOMC: Going all the way
Overview: The Federal Open Market Committee (FOMC) took yet another aggressive step at its meeting tonight by committing to purchase up to USD300bn in longer-term Treasury securities over the next six months, concentrated in the 2- to 10-year sector of the nominal Treasury curve. In addition, the Fed will expand its MBS purchase programme by USD750bn to a total of USD1,250bn and increase its purchase of agency debt by up to USD100bn. The Fed also scaled up its interest rate rhetoric stating
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Japan: BoJ steps up quantitative easing
As expected, the Bank of Japan (BoJ) left its leading O/N target rate unchanged at 0.1% in a unanimous decision by the board members. A majority of the BoJ board believes that cutting interest rates all the way to zero will prevent the money market from working appropriately. Hence we are unlikely to see another cut in the leading interest rate. Instead the name of the game is quantitative easing (the BoJ prefers to call it non-conventional easing). In connection with today's meeting the BoJ
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FOMC: Preview of policy meeting
Overview: On Wednesday night this week at 19:15 CET the Federal Open Market Committee (FOMC) is set to announce its policy rate decision. In line with market expectations and analyst consensus, we expect the Fed to keep the 0-0.25% range on the Fed funds target in place. The focus of attention will be on the committee's stance on credit easing. Spreads between MBS and Treasury yields have narrowed slightly since the last Fed meeting, but mortgage lending rates have stabilised above 5%. Pushing
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