Archive for June, 2009
Poland: NBP keeps rates on hold
As expected the Polish central bank today kept its key policy rate on hold at 3.75%. We think that the easing cycle has come to an end as inflation is likely to remain above the NBP’s inflation target of 2.5% until mid-2010. Details As expected, the Polish central bank (NBP) today announced that it will keep its key policy rate unchanged at 3.75% for the second consecutive month. This was both the market consensus and our expectation. The decision has no visible impact on Polish markets. The
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US: Fed extends liquidity facilities
The Federal Reserve issued a press release yesterday evening announcing extensions and some modifications to a number of its liquidity facilities. In general, the interest for taking out liquidity through the various facilities has been on a downward trend. By extending the most popular of the facilities to 1 February 2010, the Fed is ensuring that there will not be an abrupt stop that could disrupt markets. The Fed made it clear in the announcement that it does not expect there will be a need
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Hungary: MNB stays on hold
As expected the Hungarian central bank kept its key base rate unchanged at 9.50%. Details As expected the Hungarian central bank (MNB) today left its key policy rate unchanged at 9.50%. Assessment & Outlook: The decision to keep rates on hold was no surprise and the market impact of the rate decision should therefore be very limited. The MNB is basically stuck between a rock and a hard place on monetary policy. On the one hand, the Hungarian economy activity has plummeted, which is an
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Target rates and monetary easing levels are maintained
Pace of economic contraction is slowing No changes to the securities purchase program Rates likely to remain low for a prolonged period of time The FOMC decided to maintain its target interest rate at 0% to 0.25%. In light of data released during the intermeeting period, the FOMC acknowledged that the pace of economic contraction is slowing, citing the recent improvements in the financial markets, further signs of stabilization in household spending and better alignment of inventories with
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US: Fed’s deflation fears are easing
The FOMC statement was less dovish than we had expected. The committee decided to retain the target range for the fed funds rate and leave the size, timing and scope of the Fed’s security purchase programmes unchanged. In general, the committee has become less worried about deflation and more optimistic on growth. Still, inflation pressures are regarded as absent with slack in the economy set to keep cost pressures in check despite the recent rise in commodity prices. The statement repeated
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US: FOMC - No change in rates
No change in rates, no change in economic outlook, no additional quantitative easing and no liquidity exit from the Fed. Four negatives in the the FOMC statement but only one seemed to register with the currency market, no additional quantitative easing. Treasury rates moved modestly higher and the dollar rallied. The FOMC "expects that inflation will remain subdued for some time", and "that economic conditions are likely to warrant exceptionally low levels of federal funds for an extended
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Poland: NBP cuts by 25bp as expected
As expected the Polish central bank today cut its key policy rate by 25bp to 3.50%. We believe that this cut marks the end of the easing cycle. Details As expected, the Polish central bank (NBP) today announced that it has cut its key policy rate by 25bp to 3.50%. This was both the market consensus and our expectation. Today’s rate cut came out after two consecutive months of unchanged interest rates.
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Hungary: CB kept the base rate unchanged
CB kept the base rate unchanged (9.50%) At its today’s rate setting meeting, the monetary council of the CB kept the base rate unchanged (9.50%), in line with expectations. The statement of the council will be released and the Governor’s press conference will start at 3 pm.
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FOMC: no discussion of exit strategies
The minutes of the FOMC meeting on April 28-29 confirm that committee members remain focused on improving financial market conditions and combating deflation risks. They contained almost no discussion on possible exit strategies. While several members mentioned scaling up asset purchases, the committee chose to adopt a wait-and-see position for now. We expect improved economic indicators in coming months to effectively remove further quantitative easing from the table. Earlier today Treasury
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US: FOMC Minutes Preview
Expect few surprises An insight on discussions regarding deflation risks Expect revisions to GDP, inflation and unemployment rate forecasts for 2009/10 Hints of exit strategies and timetable for liquidity withdrawal The FOMC meeting held on April 28-29 did not spring on any surprises after the committee decided to keep rates at their historically low levels. The FOMC refrained from announcing any new recession-busting measures or extensions to existing liquidity program to help unfreeze credit
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