FXstreet.com: Fundamental: Reports on Interest Rates

Bank of Japan: More upbeat, more balanced

danskeresearch@danskebank.com (Danske Bank A/S)

As expected, the Bank of Japan (BoJ) today left its leading interest rate unchanged at 0.1%. However, it upgraded its view of the economy markedly. While BoJ remains cautious about the economy, its main message is that the economy is improving and risks to its growth and inflation outlook have started to become more balanced. Interest rate hikes in Japan are far off and will most likely lag both the ECB and Fed – albeit not by as much as the market currently expects. With BoJ upgrading its

South Africa: Gill Marcus keeps cautious stance

danskeresearch@danskebank.com (Danske Bank A/S) — Tue, 17 Nov 2009 14:54:52 GMT

The South African central bank (SARB) announced that the Monetary Policy Committee (MPC) has decided to keep the key interest rate unchanged at 7.00%. At the same time, the new governor Gill Marcus announced that the frequency of the MPC meeting would be moved back to one every second month next year. She furthermore cancelled the MPC meeting in December. Details The key policy rate was left unchanged at 7.00% at the MPC meeting. This decision was in line with our and the consensus expectation.

The ECB exit strategy – How and when

danskeresearch@danskebank.com (Danske Bank A/S) — Fri, 13 Nov 2009 10:16:52 GMT

Agenda ECB’s instruments What we know Mixed signals A more detailed look at ECB’s market operations Our script Instruments applied: Interest rates Long-term Refinancing Operations (1M, 6M, 12M) Full allotment (MRO & LTRO) Extension of list of elegible assets in collateral pool Covered bond purchases US dollar and Swiss franc liquidity What we know: Collateral pool On 7 May 2009 the Governing Council decided to prolong until the end of 2010 the temporary expansion of the list of eligible

U.S.: Monetary policy - How long can it last?

info@nbc.ca (National Bank of Canada) — Thu, 12 Nov 2009 09:36:25 GMT

There has never been in recent history such a wide range of forecasts as to when the Fed will begin to normalize interest rates. Some forecasters expect rate hikes in 2010 while others see no movement at all before the end of 2011. Well, after only one quarter of positive GDP growth, inflation expectations have increased rapidly and now stand above 200 basis points. Back in 2004, the Fed cooled off inflation expectations with its first rate hike. Today, in the context where the U.S. monetary

G20-meeting: Tobin tax steals headlines

danskeresearch@danskebank.com (Danske Bank A/S)

With G20 countries on a time schedule for coordinating and reviewing individual countries’ economic policies, the process already revealed some weakness as G20 was not able to agree on more specific policy goals. UK Prime Minister’s proposal to tax financial transactions is dead on arrival. However, a special tax on financial institutions to finance future bailouts remains on the agenda. Exchange rates issues were avoided in the final communiqué. However, IMF believes CNY is significantly

Czech: CNB stays on hold despite dovish signal from its new forecast

piet.lammens@kbc.be (KBC Bank)

Yesterday, the CNB Bank Board decided to keep interest rates on hold by a narrow 4-to-3 majority. This was out of step with expectations following the release of the previous voting result, where both the Governor and the Vice-Governor had been in favour of cutting the key rate to 1%. Nevertheless, the close outcome of the vote shows that efforts were clearly made in certain quarters to reduce rates. One of the likely factors persuading the Board to leave rates unchanged was the latest central

ECB pre-announces gradual exit from emergency liquidity measures

piet.lammens@kbc.be (KBC Bank)

ECB notes improvement in European activity but remains relaxed about inflation. Trichet hints that ECB won’t renew 12 month funding to banking system after December Markets may think ECB “exit strategy” implies earlier interest rate increases, but… ...Economic outlook still uncertain and the Bank of England eased policy further today. Reducing emergency support to the financial system will be a delicate operation. So we think ECB rates still unlikely to rise before September 2010 at the

ECB meeting: Withdrawing extraordinary liquidity

danskeresearch@danskebank.com (Danske Bank A/S) — Thu, 05 Nov 2009 18:11:24 GMT

Trichet signalled that it is soon time to begin withdrawing the extraordinary liquiditymeasures. The 12-month auction in December will be the last. We still expect shorter auctions with full allotment in 2010. As a minimum we expect the one-week actions with full allotment to continue. The assessment of the economic situation has become notably more positive and Trichet has said goodbye to the stabilisation phase. The ECB ought to revise its growth estimate for 2010 upward by a full two

Czech Republic: Czech central bank keeps interest rates on hold

danskeresearch@danskebank.com (Danske Bank A/S) — Thu, 05 Nov 2009 15:02:28 GMT

The Czech central bank (CNB) has left its key policy rate unchanged at 1.25%, in linewith consensus expectations. We had expected a further 25bp rate cut. The marketreaction was fairly strong with the Czech koruna firming around 0.7% and Czechrates up (the two-year swap rate is up 10bp). The press conference scheduled for 15:30 CEST should provide more detail about the decision. The decision to leave the key policy rate unchanged at 1.25% was in line with consensus, but against our expectation

FOMC: low rate of resources utilization warrant zero-interest rate policy

info@nbc.ca (National Bank of Canada)

FOMC: low rate of resources utilization warrant zero-interest rate policy As expected, the FOMC opted to keep interest rates unchanged. With respect to the assessment of current and future economic activity, the FOMC showed increased optimism. Over the course of past three meetings, its assessment of current conditions has changed from a “levelling out” to a “continued pick-up” in activity with the support of household spending. Despite the improving economic backdrop, however, the central

Preview: ECB November rate decision and press conference

info@ransquawk.com (RANsquawk)

Rates currently at 1.00% with all analysts look for no change today at 1245GMT Focus will be on press conference at 1330GMT Latest non-event from the ECB In today’s meeting the ECB is expected to keep interest rates unchanged at 1% and signal that financial armageddon has been avoided but the path towards recovery is yet to find firm footing. As such, the press conference will be scrutinised for potential changes in the stance regarding the monetary policy given latest improvements in economic

Preview: BOE rate/QE decision

info@ransquawk.com (RANsquawk)

Rates are currently 0.5% (all analysts going for unchanged) QE currently stands at GBP 175bln (consensus for GBP +50bln, ranging from unchanged to GBP +50bln) King(dom) of QE Despite widespread disparity concerning the accuracy of the -0.4% Q3 GDP data, there is a growing agreement between finance professionals that the BoE will vote to expand the size of its QE program. However this time it seem that the decision will be mainly driven by the mounting political pressure from the UK government

US: The Fed still binded to a zero interest-rate policy

info@nbc.ca (National Bank of Canada)

Despite the improving economic backdrop, the U.S. central bank reiterated its commitment to keep rates exceptionally low for an extended period of time. More specifically, the FOMC emphasized the low rates of resource utilization (read unemployment rate) and subdued inflation trends (both current and expected) as the conditions that warrant keeping unchanged the current policy stance. It is worth noting that the press release continued to allude to the close link between business investment

FOMC: steady as they go

piet.lammens@kbc.be (KBC Bank)

...Fed upgrades eco outlook marginally and keeps subdued inflation view intact ...while it continues to anticipate exceptionally low levels of the federal funds rate for an extended period of time ...low rates of resource utilization, subdued inflation trends, and stable inflation expectations conditions explaining current policy stance ... No word about timing exit strategy and minor change asset purchase program FOMC chooses for status quo The FOMC concluded its two day meeting with the

Fed funds rate will remain low for a prolonged period

e.economicos@bbva.bancomer.com (BBVA Bancomer) — Thu, 05 Nov 2009 07:56:53 GMT

Target interest rate maintained at 0.0-0.25% Economic slack justifies holding rates low as recovery begins FOMC economic outlook improved but challenges remain The primary take-away from the FOMC’s statement is that it will likely continue to hold the fed funds rate at a low level for a prolonged period of time even as the recovery takes hold. While the statement maintained the language stating that, “economic conditions… are likely to warrant exceptionally low levels of the federal funds rate

US: FOMC: Very little change to the statement

danskeresearch@danskebank.com (Danske Bank A/S) — Thu, 05 Nov 2009 02:29:37 GMT

FOMC decides unanimously to leave rates unchanged. Minor reduction in purchases of agency bonds does not signal policy shift. Very few changes to growth and inflation outlook. The committee still expects to keep rates exceptionally low for an extended period. No change to our forecast. No hikes before Q4 next year. Details With Fed officials providing new economic projections to the FOMC and the Q4 version of the Senior Loan Officer Survey probably to hand, the meeting will have seen few

US: The Fed reaffirms promise to keep rates low for an extended period

info@easy-forex.com (Easy Forex) — Wed, 04 Nov 2009 20:43:50 GMT

The Fed voted unanimously to leave interest rates unchanged at today's policy meeting. The FOMC purchased only 175bln of agency debt. This was less than the expected 200bln previously announced. The reduced amount of agency debt purchases reflects limited availability. The Fed says economic activity has picked up and household spending appears to be expanding but economic activity will remain weak for a time. Household spending is constrained by the jobs outlook and tight credit

FED Interest Retes Review: The FED keeps rates unchanged feeding risk appetite

forex@fxstreet.com (FXstreet.com) — Wed, 04 Nov 2009 20:19:08 GMT

After the FED left rates low for an extended period, due to high unemployment levels and current low inflation, dollar is losing ground quickly against european and commodity currencies. The fact that FED expressed growing confident in the economic recovery, send stocks higher feeding risk appetite: gold reach a fresh historical high at 1097, EUR/USD hit 1.4900, while GBP/USD reached the 1.6600 level as expected. Japanese yen, the other safe haven, remains however in range between

Preview: FOMC November rate decision

info@ransquawk.com (RANsquawk)

The FOMC is expected to keep interest rates in a 0-0.25% range at the November meeting and could refrain from major changes to the accompanying statement after much speculation last week. On the whole, analysts believe the Fed will stick to the wording: rates to stay low for an ‘extended period’ for at least one more month as inflationary pressures continue to remain subdued due to the enormous slack in the economy and high unemployment levels. Though, some analysts believe there is still a

BOE and ECB: Preview of Thursday's meetings

info@easy-forex.com (Easy Forex)

The Bank of England (BOE) will hold a policy meeting on Thursday November 5th. At the October policy meeting the BOE elected to maintain the current level of interest rates at a record low 0.5% and asset purchases at £175bln. The BOE indicated that they would keep the scale of the asset purchase plan under review. Two recent UK economic reports generated concern about the outlook for the UK economy and may encourage the BOE to expand its asset purchase plan at the November policy meeting. UK

ECB preview: Waiting for the master plan

danskeresearch@danskebank.com (Danske Bank A/S)

The ECB is expected to leave the refinancing rate unchanged at the Governing Council meeting on Thursday. We expect the tone at the press conference to turn slightly more positive (again) as both soft and hard data continues to improve further, but Trichet is unlikely to signal any rate hikes for the near future. Trichet might hint that the ECB intends to begin to roll back unconventional measures next year, but we do not expect him to give anything like a master plan or even an indication of

Euroland: A few comments on a hawkish Weber

danskeresearch@danskebank.com (Danske Bank A/S) — Thu, 29 Oct 2009 18:26:59 GMT

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

Norway: Norges Bank might not live up to expectations

danskeresearch@danskebank.com (Danske Bank A/S) — Mon, 26 Oct 2009 20:37:18 GMT

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%

South Africa: The easing cycle is over

danskeresearch@danskebank.com (Danske Bank A/S) — Fri, 23 Oct 2009 10:13:54 GMT

The South African central bank (SARB) announced that the Monetary Policy Committee (MPC) has decided to keep the key rate unchanged at 7.00%. Details The South African central bank decided at its MPC meeting today to keep the key policy rate unchanged at 7.00%. This decision was in line with our and the consensus expectation. The market reaction was very limited with yields slightly up and a slightly weaker rand against the dollar. Assessment & Outlook The comments from the SARB governor,

Sweden: Riksbank comment

danskeresearch@danskebank.com (Danske Bank A/S) — Thu, 22 Oct 2009 18:50:27 GMT

The Riksbank's announcement was much in line with what we expected. However, the new fixed-rate long-term repo was not completely anticipated. Our current trading recommendations have, in general, benefited from the meeting. Back-loaded policy With exactly the same repo rate path as in September (but extended by one quarter) the Riksbank once again attempted to persuade markets that they are premature in pricing in rate hikes. Cases suggesting early hikes are typically based on macro data

Canada: The Canadian dollar under the spotlights

info@nbc.ca (National Bank of Canada) — Tue, 20 Oct 2009 18:21:58 GMT

As expected the Bank of Canada left the overnight rate unchanged at 0.25 % and maintained its conditional commitment to keep the rate at the current level until the end of Q2 2010. Although, the Bank’s assessment of recent economic conditions, both domestically and abroad, sounds more upbeat than in September, the outlook for 2011 was nevertheless downgraded slightly. The Bank now projects the Canadian economy will grow by 3.3% in 2011 compared to 3.5% in the July MPR. The projection for

FOMC Minutes from September 22-23, 2009

e.economicos@bbva.bancomer.com (BBVA Bancomer) — Thu, 15 Oct 2009 08:25:44 GMT

Staff revised GDP forecast upward; labor market weak Inflation likely to remain subdued; exit strategies discussed Target rate will remain at 0%-0.25% for an extended period Recent consumer spending and housing market data show initial signs of recovery. Despite the staff’s upward revision of GDP growth, unemployment remains high and employment growth will remain low. “Participants emphasized that the labor market remains weak,” and they expect only “moderate growth in consumer spending.” Some

Fed Interest Rate decision Review

trading@cmsfx.com (CMS Forex) — Wed, 23 Sep 2009 20:02:28 GMT

Today's announcement didnt hold much in the way of surprises. The Fed, though seeing improvement in the economy, does not want to take away the support it has been providing with its low rates and its asset-purchase programs that should continue to pressure the greenback. Look for any hints about higher rates to come from Fed officials in speeches now until we get to next month's FOMC decision. However it seems that the inflation is not seen as a big threat right now by the Fed, and until

BoC Policy Monitor: BoC is more upbeat on the economic outlook

info@nbc.ca (National Bank of Canada)

As expected the Bank of Canada left the overnight rate unchanged at 0.25 % and maintained its conditional commitment to maintain it at this level until the end of Q2 2010. Although the commitment is maintained, the tone of the press release was significantly more upbeat when it comes to both global and Canadian economic prospects. Whereas our central bank previously saw early strength in domestic demand as “just” a bringing forward of household expenditures, it now sees the recent rebound in

Preview of BOE & BOC policy meetings

info@easy-forex.com (Easy Forex)

BOE meeting The Bank of England (BOE) will meet on Thursday, September 10th. At the August BOE policy meeting the BOE decided to hold interest rates unchanged at a record low 0.5% and announced a surprise expansion of quantitative ease. The BOE increased its quantitative ease program from £125 bln to £175 bln. The MPC minutes for the August meeting indicated that the BOE policy board was split over the decision to expand quantitative ease with three board members including BOE Governor King

FOMC Minutes August 11-12, 2009

e.economicos@bbva.bancomer.com (BBVA Bancomer) — Thu, 03 Sep 2009 10:38:30 GMT

• Economic recovery is expected in 2H09, but challenges remain • Downside risks to inflation persist • Target rate will remain at 0%-0.25% for a prolonged period The FOMC expressed more confidence in its outlook that economic growth would take hold in the second half of 2009, although it believes that risks remain. Furthermore, members agreed that the pace of recovery would pick-up in 2010, but they expressed uncertainty about the strength of the rebound, citing consumer spending and credit

Fed improves outlook while maintaining target rates

e.economicos@bbva.bancomer.com (BBVA Bancomer) — Thu, 13 Aug 2009 07:16:43 GMT

Economic activity is stabilizing, but risks remain Fed will slow Treasury purchases to the end of October Outlook still warrants low rates for a prolonged period Given current economic conditions, the FOMC will maintain its target interest rate at 0% to 0.25%. In line with recent data, the committee stated that “economic activity is leveling out,” which is a more positive outlook than the previous meeting’s message that contraction was slowing. Nevertheless, ongoing risk could cause economic

Fed Interest Rate decision Review

trading@cmsfx.com (CMS Forex) — Wed, 12 Aug 2009 19:37:44 GMT

Today's announcement, while acknowledging the better data from the US, did not present any "exit-strategy" language from its zero-interest rate policy. we did see that the treasury purchase plan is set to be conclude, though te pace at which the Fed will buy Treasuries will slow, so that the program can run through October. Though there was initial greenback strength, most of the gains were pared down, which made this a rather volatile and tricky news event to trade. What to look for coming up

FOMC Minutes June 23-24, 2009

e.economicos@bbva.bancomer.com (BBVA Bancomer) — Fri, 17 Jul 2009 09:18:28 GMT

Economic activity has stabilized further, but risks remain Core inflation is expected to remain low Committee will maintain the target rate of 0 to 0.25% The FOMC announced that economic contraction had subsided and downside risks to economic growth had diminished, but threats remain. Participants also judged that financial market developments have been positive, but could be attributed to support from government programs rather than solid fundamentals, and credit markets remain tight amid

BOE: likely to expand QE to GBP 150bln from GBP 125bln

info@ransquawk.com (RANsquawk) — Thu, 09 Jul 2009 09:43:06 GMT

BOE likely to expand QE to GBP 150bln from GBP 125bln Some analysts think the BOE may request to up its ceiling beyond GBP 150bln All analysts expect BOE to leave interest rates unchanged at 0.50% It’s a near certainty that record low interest rates at today’s meeting will be left unchanged, with the focus solely on any potential extension of the BOE’s QE programme. The consensus is for the BOE to increase the size of its current QE programme by GBP 25 bln, which means asset purchases will

Target rates and monetary easing levels are maintained

e.economicos@bbva.bancomer.com (BBVA Bancomer) — Thu, 25 Jun 2009 14:28:20 GMT

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

FOMC Minutes April 28-29, 2009

e.economicos@bbva.bancomer.com (BBVA Bancomer) — Thu, 21 May 2009 07:40:14 GMT

Signs of stabilization in economic and financial activity Risks of deflation have diminished Interest rates are expected to remain unchanged The FOMC agreed that the near-term economic outlook has improved, but there are still “significant downside risks.” In addition, financial market conditions have strengthened but the system remains vulnerable to shocks and credit markets are still weak. Staff revised up its forecasts for 2H09 and 2010 after revising them down in March in response to

The FOMC acknowledged signs of stabilization

e.economicos@bbva.bancomer.com (BBVA Bancomer) — Thu, 30 Apr 2009 08:21:58 GMT

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

Fed kept its target rate unaltered and intensifies quantitative easing

e.economicos@bbva.bancomer.com (BBVA Bancomer) — Thu, 19 Mar 2009 08:58:37 GMT

The economic outlook worsened Fed significantly increased the size of its balance sheet Similar measures are likely in the near future The FOMC decided to maintain its target interest rate at 0 to 0.25%. During the intermeeting period, economic conditions remained weak as “Job losses, declining equity and housing wealth, and tight credit conditions have weighed on consumer sentiment and spending.” In addition, financial instability has prompted firms to scale back investment, while exports of

FOMC Minutes January 27-28, 2009

e.economicos@bbva.bancomer.com (BBVA Bancomer) — Thu, 19 Feb 2009 10:40:05 GMT

Downside risks to growth intensified FOMC discussed additional measures to boost recovery We expect interest rates to remain unchanged FOMC viewed credit conditions as extremely tight, “with financial markets fragile and some parts of the banking sector under substantial stress.” Yet, FOMC highlighted signs of recovery in markets receiving relief from the different liquidity facilities. Staff revised downwards its forecast for 1H09, as weaker-thanexpected economic releases more than