Heteronomics Archive

April 16, 2025

Canada: Policy Rate Held At 2.75% (Consensus 2.75%) in Apr-25

The Bank of Canada held its policy rate at 2.75%, meeting expectations but disappointing those market participants who had positioned for another rate cut amid rising trade tensions and economic uncertainty.
The decision reflects a careful balance between weakening domestic demand and inflation risks from tariff-related cost increases, with short-term inflation expectations having risen despite moderating core inflation.
Future policy adjustments will be guided by the evolving trade landscape, the extent of demand erosion and cost pass-through, and the anchoring of inflation expectations, with the Bank highlighting its limited role in mitigating trade-driven shocks.

April 10, 2025

The BSP cut its policy rate by 25bps to 5.50%, aligning with expectations and marking a shift towards accommodation following the unexpectedly hawkish February hold.
Substantial downward revisions to inflation forecasts, with 2025 inflation now seen at just 2.3%, support the easing decision and suggest scope for further rate reductions.
Despite a dovish tilt, the BSP signalled a cautious, data-driven approach to additional cuts, with external headwinds and inflation risks dictating the pace of monetary easing.

April 09, 2025

As widely expected, the Monetary Policy Committee reduced the OCR by 25 basis points to 3.5%, citing stable inflation near the midpoint of the target range and significant spare capacity in the domestic economy.
The recent imposition of global trade barriers has increased downside risks to economic activity and inflation, prompting a reassessment of the medium-term inflation outlook.
While global inflation dynamics remain uncertain, the Committee signalled that further rate cuts remain possible, contingent on the evolution of inflationary pressures and external economic developments.

April 03, 2025

In the accounts for its March meeting, the ECB cited a broadly intact disinflation path and moderating wage pressures, but emphasised that rising trade and fiscal uncertainties diminish the reliability of the baseline outlook.
While most inflation indicators point to a sustained return to target, sticky services inflation and tight labour markets present upside risks, necessitating a cautious approach to future rate cuts.
With credit conditions easing and policy rates approaching estimated neutral levels, the ECB acknowledged that monetary policy is becoming less restrictive and refrained from signalling further easing.