Archive for October, 2009
Poland: Unchanged rates - no surprise here
As expected the Polish central bank (NBP) today announced that it is leaving its key policy rate unchanged at 3.50%. We think the NBP will leave rates on hold for quite a while – more or less in line with the market pricing. Paradoxically we are now in a situation where there are both arguments for rate cuts and rate hikes within the next 12 months. The hawks will argue that even though inflation is likely to come down in Q1 10, it is also likely to remain (slightly) above the Polish central
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Lithuania: another cut in ratings
Ratings agency Moody’s last night downgraded Lithuania’s rating by a notch to Baa1 from A3 and maintained its ‘negative outlook’. This is the second time this year that Lithuania’s rating has been cut. The current downgrading of the rating reflects concerns about the sustainability of fiscal policy. According to Moody’s, the economic recession “continues to place a severe pressure” on the fiscal policy. The ratings agency predicted that budget deficits are likely to be in the “high single
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Russia: Decreasing inflation prompts rate cut
The Russian central bank (CBR) decided today to cut its refinancing rate by 50bp to 10.00%. The cut was the sharpest in recent months and this reflects a return to a faster pace of monetary policy easing to stimulate the slumping economy. The oneday REPO auction was only lowered by 25bp to 7.25%. The differing amounts by which different rates were cut is intended to increase banks’ interest in refinancing instruments with terms of 1-2 weeks and reduce their dependence on 1-day repo operations.
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Euroland: A few comments on a hawkish Weber
Earlier today ECB Governing Council member Weber gave a speech to a group of bankers in Berlin. He was more hawkish than usual both with regards to German fiscal policies and more importantly with respect to the ECB exit strategy. On exit strategy On the exit strategy Weber said that "Exit from unconventional measures should come gradually," and later added that "Unconventional measures will likely be rolled back next year," ... "(but) it would be counter-productive to set
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Euroland: A few comments on a hawkish Weber
Earlier today ECB Governing Council member Weber gave a speech to a group of bankers in Berlin. He was more hawkish than usual both with regards to German fiscal policies and more importantly with respect to the ECB exit strategy. On exit strategy On the exit strategy Weber said that “Exit from unconventional measures should come gradually,” and later added that “Unconventional measures will likely be rolled back next year,” … “(but) it would be counter-productive to set
Japan: Bank of Japan preview
The focus of attention at tomorrow’s monetary meeting is expected to mainly be on the release of the BoJ’s revised growth and inflation forecast. We expect the BoJ’s growth forecast to be revised up. Attention should particularly be paid to the BoJ’s 2011 inflation forecast, as it should give some idea about how long the BoJ expects deflation to prevail. While we expect most non-conventional easing measures to be scrapped soon, this is in our opinion unlikely to be
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Hungary: NBH cut the base rate by 50bp to 7.50%
As expected, the Monetary Council of the NBH cut the base rate by 50bp to 7.50% at its today's rate setting meeting. The statement of the council will be published and the Governor's press conference will start at 3 pm.
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Hungary: Another 50bp cut
Fully in line with the consensus expectation and our expectation, the Hungarian central bank (MNB) today decided to cut its key policy rate by another 50bp to 7.50%. The cut in interest rates comes on the back of lower-than-expected inflation in recent months and essentially no inflationary pressures in the economy due to the still deep economic crisis. Furthermore, the relatively stable forint and increased global risk appetite have opened the door for continued monetary easing. Going
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Norway: Norges Bank might not live up to expectations
Norges Bank is expected to raise its key rate by 25bp to 1.5% at its policy meeting on Wednesday. Stronger domestic growth, reduced risks from the financial crisis and the global economy, and lower credit premiums in the fixed income market all speak in favour of raising interest rates. The probability of a rate hike was further bolstered when the inflation figures for September were released. They showed that underlying inflation jumped to 2.4% in September from 2.1%
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FOMC: Extending mortgage purchases through March
Fed leaves its target rate unchanged at 0-0.25% and maintains the size of asset purchase programs MBS/Agency purchases extended through March 2010 in effort to gradually phase out intervention in the mortgage market Language on growth upgraded reflecting recent improvement in data, but outlook still very weak. Softer language on inflation as energy prices have levelled out. Outlook remains unchanged with the Fed keeping rates close to zero for a very long time. Details: In an effort to smooth
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