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Philippines Policy Rate 6.5% (consensus 6.5%) in Apr-24

• The BSP’s decision to maintain the policy rate at 6.5% reflects a strategic response to a modest uptick in inflation forecasts and the challenge of balancing inflation mitigation with economic growth, indicating a cautious yet proactive approach to monetary policy management.
• Despite the upside risks to inflation, particularly from supply-side pressures, the Monetary Board’s confidence in keeping inflation expectations anchored assumes the effectiveness of the current policy stance in maintaining inflationary stability.
• The BSP’s emphasis on economic growth prospects and its readiness to adapt policy settings in response to shifting economic and inflationary landscapes highlight a commitment to flexible and forward-looking monetary policy, ensuring price stability and sustained economic health.

Chile Policy Interest Rate 6.5% (consensus 6.5%) in Apr-24

• The Central Bank of Chile reduced its MPR by 75 basis points to 6.5%, aligning with consensus expectations amid downward global inflation trends, yet noting risks from transportation and fuel costs.
• Domestically, the economy shows mixed signals with better-than-expected activity but subdued demand and investment, alongside an economy reflecting global financial market trends with adjustments in interest rates and currency depreciation.
• The Board anticipates further reductions in the MPR, considering the macroeconomic scenario and inflation trajectory, emphasizing the need for a flexible policy approach in response to transient inflationary pressures and external economic risks.

BoE Hawks Read the Writing on the Wall

• The BoE held the Bank rate at 5.25%, with only one dissent for a cut as the two hawks stopped pushing for a hike that was not going to happen, given broad resistance.
• An extended period of restrictive policy is still envisaged, with persistent inflationary pressures rather than the spot CPI rate guiding when rate cuts begin.
• Wage and service inflation is not seen returning to target sufficiently rapidly yet, and we expect that problem to persist, leaving our call for the first cut back in Feb-25.

By Philip Rush

Norges Bank Policy Rate 4.5% (consensus 4.5%) in Mar-24

• The Norges Bank decided to keep the policy rate at 4.5% to balance inflation control and economic growth amid slowing but above-target inflation and modest economic activity.
• Inflation is now expected to decelerate somewhat faster than anticipated, economic growth is more subdued in the first half of 2024 before improving, while unemployment rises slightly less than previously expected.
• The Committee is ready to adjust the policy rate in response to evolving economic and inflationary trends. It aims to steer inflation towards the 2% target by the end of 2027 while navigating prevailing uncertainties.