Monetary policy latest publications
There is still plenty of room to cut rates; we expect the monetary policy stance to reach neutrality by the summer of next year.
There was much curiosity surrounding Christine Lagarde's first press conference following a meeting of the ECB's Governing Council. This was not so much over the tone of monetary policy—which followed the same lines as in Mario Draghi's era—but over how she would act in a fractured field where some did not welcome her.
A faster easing pace is warranted but Banxico is likely to remain overly cautious. No signs that Banxico is willing to speed up the long overdue easing cycle.
Overall, Mrs Lagarde’ first post-meeting press conference went as expected, with an outspoken communication style when talking about different issues not strictly related to monetary policy, and an unchanged line on the monetary policy stance.
The Central Bank of Turkey (CBRT) decreased the policy rate by 200 bps to 12% from 14%, slightly higher than market expectation of 150 bps. Global Central Banks Dovishness remain supportive but we think that complacency should be ruled out and the CBRT should be ready to act in any direction if the situation change.
The financial markets enter the final stretch of the year with their eyes set firmly on the trade war and Brexit, meaning that the optimism surrounding the favorable resolution of both matters could be the stimulus that the world economy needs to regain momentum.
November 12, 2019
Banxico will continue their rate cut cycle with a larger 50bp rate cut on Thursday
A 50bp rate cut would mark the beginning of a long overdue easing cycle.
Several days ago, and for the third time this year, the Fed reduced the federal funds rate target range by 25 basis points to a range of between 1.5% and 1.75%. It is very unlikely that it will lower rates again in December.