Itaú BBA - Global Monetary Policy Monitor

Macro Vision

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Global Monetary Policy Monitor

julio 4, 2018

The number of central banks tightening monetary policy in June reiterated the trend of less stimulus observed since April

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

In June, there were monetary policy decisions in 25 of the 33 countries we monitor. In emerging countries, benchmark interest rates increased in the Czech Republic, India, Indonesia, Mexico, the Philippines and Turkey, while China reduced banks’ reserve requirements. In developed markets, the Fed raised the interest rate and the ECB signaled the end of the QE. As a result, the number of central banks tightening monetary policy reiterated the trend of less stimulus observed since April. 

Still in the wake of greater global pressures, the central banks of the Czech Republic, the Philippines, India and Mexico delivered 25-bp hikes, to 1.00%, 3.50%, 6.25% and 7.75%, respectively. With the exception of the Czech Republic, the hikes were expected by the markets (although in the case of India, not necessarily in June). Indonesia also raised interest rates by 50 bps to 5.25% and Turkey by 125 bps to 17.75%, both in line with market consensus. On the other hand, China delivered some monetary easing, by reducing reserve requirements to 15.5% from 16%. In developed markets, the Fed continued its policy normalization cycle, raising the interest rate by 25 bps to 2%, while the ECB announced that its bond-buying program will end in September this year. 

In July, the highlight in developed markets is set to be a 25-bp increase in Canada, while in the Eurozone and Japan central banks are expected to keep policy rates at their current levels. In Latin America, the central banks that will have policy decisions this month are set to stay on hold. In Argentina, monetary authorities will likely change the policy rate instrument. In any case, the yields paid on short-term Lebacs are currently far above the 40% policy rate.

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



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