Itaú BBA - Global Monetary Policy Monitor_Sep18

Global Monetary Policy Monitor

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Global Monetary Policy Monitor_Sep18

September 10, 2018

The number of central banks tightening monetary policy has increased significantly, reinforcing the global trend of fewer stimuli observed since April

For the version with all charts and tables, please open the attached pdf file 
 

In August, there were monetary policy decisions in 19 of the 33 countries we monitor. In developed countries, interest rates increased in the United Kingdom, and in emerging countries, India, Indonesia, the Philippines and the Czech Republic also raised rates. Additionally, Argentina had to react to market pressures again, delivering a 2000 bps hike in its benchmark rate, along with new announcements regarding fiscal policy. As a result, the number of central banks tightening monetary policy has increased significantly, reinforcing the global trend of fewer stimuli observed since April.

In Argentina, the Monetary Policy Committee decided in two extraordinary meetings to increase its benchmark rate, initially 500 bps on August 13, and a new increase of 1500 bps on August 30, ending the month in 60.0% pa, and pledged not to reduce these levels until at least December.

Still in the wake of increased global pressures, the Philippine central bank raised its base rate by 50 bps, to 4.0% pa, in line with the consensus. Central banks in the Czech Republic, India and Indonesia delivered 25 bps hikes in their benchmark rates, to 1.25%, 6.5% and 5.5% pa, respectively. With the exception of Indonesia, the hikes were expected by the market. In the UK, the Bank of England also decided, on August 2, to raise its base rate by 25 bps, to 0.75% pa, in line with expectations. On the same day, in the United States, the Fed decided to keep its benchmark interest rate unchanged, but kept its usual signaling of gradual hikes in the future. In Brazil, the Copom maintained the Selic rate at 6.5% pa and avoided discussions about short-term movements in its communication.

In September, the highlight in developed countries will likely be a 25-bp hike in the United States, while in the Eurozone and Japan the basic interest rates should remain stable. In Latin America, central banks that have monetary policy meetings this month are set to remain on hold.

For the version with all charts and tables, please open the attached pdf file 



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