Archive

Korea Policy Rate 3.5% (consensus 3.5%) in Apr-24

• The Bank of Korea has maintained the Policy Rate at 3.5%, aligning with the economic consensus in response to ongoing global uncertainties, notably the varied monetary policies of major economies and geopolitical risks.
• Inflation dynamics influenced by volatile commodity prices alongside a slowing core inflation rate dictate a cautious monetary policy to stabilize mid-term inflation expectations.
• Financial stability remains a priority, with the central bank monitoring household debt and real estate market risks alongside global financial market fluctuations to guide future interest rate decisions amidst uncertain economic conditions.

ECB Loosely Tied to Cut in June

• The ECB maintained its policy rates and did not pre-commit to a June cut. However, a few members wanted to cut now, and the statement added explicit conditionality.
• Guidance now ties the ECB to a June cut, albeit with ongoing data dependence preserving wriggle room. Sticky services inflation and Fed rates won’t stay its hand.
• Resilient data are rolling back Fed views to our September call, but we now doubt the ECB will want to delay past June. The BoE would probably only then wait until Nov-24.

By Philip Rush

Peru Policy Interest Rate 6.0% (consensus 6.25%) in Apr-24

• The BCRP unexpectedly reduced the policy rate to 6.0% despite market expectations for no change after March’s inflation spike, which the BCRP considers transitory amid ongoing declines in year-on-year inflation rates.
• Future policy decisions will hinge on inflationary trends and global economic conditions, ensuring the bank remains agile in its monetary policy approach.
• The bank’s readiness to adjust its policy stance in response to evolving economic data underscores a commitment to achieving its inflation target while managing potential external risks and financial market volatilities.

Thailand Policy Rate 2.5% (consensus 2.5%) in Apr-24

• The Bank of Thailand's decision to keep the Policy Rate unchanged at 2.5%, despite some members advocating for a reduction, demonstrates a cautious optimism about economic growth and structural impediments, alongside a commitment to macro-financial stability.
• Growth projections for 2024 and 2025 are supported by private consumption, tourism, and public expenditure, albeit tempered by structural challenges in exports and manufacturing, underscoring the need for comprehensive structural reforms.
• The inflation outlook remains subdued, with expectations of a gradual increase towards the target range, necessitating vigilant monitoring of external shocks and the efficacy of monetary policy in fostering an environment conducive to sustainable economic growth amid financial stability concerns.