Central Bank Sentiment

Central Bank Sentiment

Federal Reserve

Chair: Jerome Powell

Fed Funds Target Rate: 0.25%

Inflation Target: 2.00%

Actual Inflation: 1.4%

FOMC Statement: (27th January 2021) In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook.

The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals. The Committee’s assessments will take into account a wide range of information, including readings on public health, labor market conditions, inflation pressures and inflation expectations, and financial and international developments.

Overall Sentiment: DOVISH

Next Expected Decision: 17th March – No change expected

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Bank of Japan

Governor: Haruhiko Kuroda

BOJ Policy Rate: -0.10%

Inflation Target: 2.00%

Actual Inflation: -1.2%

BOJ Statement: (18th December 2020) The Bank will continue with “Quantitative and Qualitative Monetary Easing (QQE) with Yield Curve Control,” aiming to achieve the price stability target of 2 percent, as long as it is necessary for maintaining that target in a stable manner.

Overall Sentiment: DOVISH

Next Expected Decision: 19th March – No Change expected

Monetary Policy Overview

Bank of Canada

Governor: Tiff Macklem

BOC Policy Rate: 0.25%

Inflation Target: 2.00% ± 1.00%

Actual Inflation: 0.7%

BOC Statement: (20th January 2021) – In view of the weakness of near-term growth and the protracted nature of the recovery, the Canadian economy will continue to require extraordinary monetary policy support.

The Governing Council will hold the policy interest rate at the effective lower bound until economic slack is absorbed so that the 2 percent inflation target is sustainably achieved. In our projection, this does not happen until into 2023.

To reinforce this commitment and keep interest rates low across the yield curve, the Bank will continue its QE program until the recovery is well underway.  As the Governing Council gains confidence in the strength of the recovery, the pace of net purchases of Government of Canada bonds will be adjusted as required. We remain committed to providing the appropriate degree of monetary policy stimulus to support the recovery and achieve the inflation objective.

Overall Sentiment: DOVISH

Next Expected Decision: 10th March – No change expected

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Swiss National Bank

Chairman: Thomas Jordan

SNB Policy Rate: -0.75%

Inflation Target: =<2.00%

Actual Inflation: -0.8%

SNB Statement: (17th December 2020) The SNB is keeping the SNB policy rate and interest on sight deposits at the SNB at −0.75%. The SNB expects GDP growth of 2.5% to 3% for 2021. The recovery thus remains incomplete. Unemployment is likely to rise again, and production factors will remain underutilised for some time yet. The forecast for Switzerland, as for the global economy, is subject to high uncertainty. In light of the highly valued Swiss franc, the SNB remains willing to intervene more strongly in the foreign exchange market.

Overall Sentiment: DOVISH

Next Expected Decision: 25th March – No Change

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European Central Bank

President: Christine Lagarde

ECB Policy Rate: 0.0%

Inflation Target: <2.00%

Actual Inflation: 0.9%

ECB Statement: (21st January 2021) The Governing Council continues to stand ready to adjust all of its instruments, as appropriate, to ensure that inflation moves towards its aim in a sustained manner, in line with its commitment to symmetry.

Overall Sentiment: DOVISH

Next Expected Decision: 11th March – No change expected

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Bank of England

Governor: Andrew Bailey

BOE Bank Rate: 0.1%

Inflation Target: 2.00%

Actual Inflation: 0.6%

MPC Statement: (4th February 2021) The outlook for the economy remains unusually uncertain. It depends on the evolution of the pandemic, measures taken to protect public health, and how households, businesses and financial markets respond to these developments.

The MPC will continue to monitor the situation closely. If the outlook for inflation weakens, the Committee stands ready to take whatever additional action is necessary to achieve its remit. The Committee does not intend to tighten monetary policy at least until there is clear evidence that significant progress is being made in eliminating spare capacity and achieving the 2% inflation target sustainably.

Overall Sentiment: DOVISH

Next Expected Decision: 18th March – No change expected

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Reserve Bank of Australia

Governor: Philip Lowe

RBA Policy Rate: 0.10%

Inflation Target: 2.00% – 3.00%

Actual Inflation: 0.9%

RBA Statement: (2nd February 2021) The Board will not increase the cash rate until actual inflation is sustainably within the 2 to 3 per cent target range. For this to occur, wages growth will have to be materially higher than it is currently. This will require significant gains in employment and a return to a tight labour market. The Board does not expect these conditions to be met until 2024 at the earliest.

Overall Sentiment: DOVISH

Next Expected Decision: 2nd March – No change expected

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Monetary Policy Overview

Reserve Bank of New Zealand

Governor: Adrian Orr

RBNZ Policy Rate: 0.25%

Inflation Target: 2.00% ± 1.00%

Actual Inflation: 1.4%

RBNZ Statement: (11th November 2020) The Monetary Policy Committee agreed to provide additional monetary stimulus to the economy in order to meet its consumer price inflation and employment remit. The Committee agreed that the additional stimulus would be provided through a Funding for Lending Programme (FLP), commencing in December.

The FLP will reduce banks’ funding costs and lower interest rates. The Committee will also continue with the Large Scale Asset Purchase (LSAP) Programme up to $100 billion, and retain the Official Cash Rate (OCR) at 0.25 percent in accordance with the guidance issued on 16 March 2020.

Overall Sentiment: DOVISH

Next Expected Decision: 24th February – No change expected

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