Archive

Norway Policy Rate 4.5% (consensus 4.5%) in Sep-24

• The Norges Bank kept its policy rate at 4.5%, aligning with expectations, as it aims to balance disinflationary efforts with the costs of subdued economic growth.
• While inflation has declined significantly, elevated wage growth and weak productivity continue to drive business costs higher, complicating the disinflation process.
• The policy rate is expected to remain unchanged until the end of 2024, with potential easing in 2025, though uncertainties surrounding the krone depreciation and economic growth may prompt adjustments.

BoE Holds Gaze On November

• The BoE matched widespread expectations by holding the Bank rate at 5.00%, albeit with the lone dissent (Swati Dhingra) matching our relatively hawkish forecast.
• Little news was seen in UK indicators. Broadly reduced market rate paths and increased uncertainty around near-term global activity could not overcome cautious inertia.
• November was unsurprisingly identified as the occasion for the MPC to fully assess news, consistent with cuts aligning with MPR forecasts and the current consensus.

By Philip Rush

Brazil Policy Rate 10.75% (consensus 10.75%) in Sep-24

• Brazil's Copom raised the Selic rate by 25bps to 10.75%, in line with expectations, to counter persistent inflationary pressures amid stronger-than-expected domestic economic activity.
• Inflation expectations for 2024 and 2025 remain elevated, and Copom sees asymmetric risks, particularly from resilient services inflation, currency depreciation, and global uncertainties.
• Future rate adjustments will depend on inflation dynamics, expectations, and the global economic landscape, with the Committee committed to maintaining a contractionary stance to ensure inflation convergence toward its target.

US Policy Rate Cut By 50bps To 5.0% in Sep-24

• The FOMC reduced the federal funds target rate by 50 basis points, a more significant cut than the 25bp previously anticipated by economists but consistent with underhand press briefings.
• Inflation has eased to 2.2%, down from 7%, while the labour market continues to cool gradually, with unemployment rising to 4.2% but remaining historically low.
• Dot plots project the federal funds rate at 4.4% by the end of 2024, with another 100bp cut in 2025. Future rate cuts will depend on inflation and labour market developments.