MARKET MOVER - BNP PARIBAS - Investment Services India
MARKET MOVER - BNP PARIBAS - Investment Services India
MARKET MOVER - BNP PARIBAS - Investment Services India
Create successful ePaper yourself
Turn your PDF publications into a flip-book with our unique Google optimized e-Paper software.
Central Bank Watch<br />
Interest Rate<br />
EUROZONE<br />
Current<br />
Rate (%)<br />
Minimum Bid Rate 1.00<br />
US<br />
Fed Funds Rate 0 to 0.25<br />
Discount Rate 0.75<br />
JAPAN<br />
Call Rate 0.10<br />
Basic Loan Rate 0.30<br />
UK<br />
Bank Rate 0.5<br />
DENMARK<br />
Lending Rate 1.05<br />
SWEDEN<br />
Repo Rate 0.75<br />
NORWAY<br />
Sight Deposit Rate 2.00<br />
SWITZERLAND<br />
3 Mth LIBOR Target<br />
Range<br />
CANADA<br />
0.0-0.75<br />
Overnight Rate 1.00<br />
Bank Rate 1.25<br />
AUSTRALIA<br />
Cash Rate 4.50<br />
CHINA<br />
1Y Bank Lending<br />
Rate<br />
BRAZIL<br />
5.31%<br />
Selic Overnight Rate 10.75<br />
Date of Last<br />
Change<br />
-25bp<br />
(7/5/09)<br />
-75bp<br />
(16/12/08)<br />
+25bp<br />
(18/2/10)<br />
-20bp<br />
(19/12/08)<br />
-20bp<br />
(19/12/08)<br />
-50bp<br />
(5/3/09)<br />
-10bp<br />
(14/1/10)<br />
+25bp<br />
(2/9/10)<br />
+25bp<br />
(5/5/09)<br />
-25bp<br />
(12/3/09)<br />
+25bp<br />
(8/9/10)<br />
+25bp<br />
(8/9/10)<br />
+25bp<br />
(5/5/10)<br />
-27bp<br />
(22/12/08)<br />
+50bp<br />
(21/7/10)<br />
Next Change in<br />
Coming 6 Months<br />
No Change<br />
No Change<br />
No Change<br />
No Change<br />
No Change<br />
No Change<br />
No Change<br />
+25bp<br />
(26/10/10)<br />
+25bp<br />
(26/01/11)<br />
No Change<br />
+25bp<br />
(20/10/10)<br />
+25bp<br />
(20/10/10)<br />
+25bp<br />
(2/11/10)<br />
No Change<br />
+50bp<br />
(26/1/11)<br />
Source: <strong>BNP</strong> Paribas<br />
For the full EMK Central Bank Watch please see our Local Markets Mover<br />
Comments<br />
Doubts about the sustainability of the recovery and low inflation<br />
pressures imply no rise in the refinancing rate for a considerable<br />
period of time: we expect the first increase only in H2 2012.<br />
The FOMC is expected to maintain the funds rate at 0 to 0.25%<br />
for an extended period and is likely to initiate a second round of<br />
quantitative easing in Q4 2010.<br />
We expect the BoJ to maintain its super-low rate policy until<br />
2012, but it may in the meantime further expand its liquidity<br />
provision to cooperate with the government in countering<br />
deflation and the yen’s appreciation.<br />
We expect the MPC to reengage in asset purchases although<br />
elevated inflation could delay this until February 2011. We do<br />
not expect the BoE to start raising Bank Rate before H1 2012.<br />
We expect the central bank to keep its policy rate on hold until<br />
H2 2012, in line with our expectation for the ECB.<br />
As economic growth remains strong and labour market<br />
conditions improve further, we expect the Riksbank to deliver a<br />
further hike at its October meeting.<br />
Moderate growth since the start of the year and our<br />
expectations of a slowdown in growth in Norway’s main trading<br />
partners suggest further rate hikes will come gradually. We<br />
expect the next hike in Q1 2011.<br />
Rates are looking inappropriate given the strength of the<br />
domestic economy. But the first hike is being delayed by<br />
financial stress in the markets and the exceptional strength of<br />
the CHF.<br />
Depending on developments in global financial markets and the<br />
US economic outlook in particular, we expect the BoC to deliver<br />
an additional 25bp of tightening in October. The BoC is then<br />
expected to pause at 1.25% to allow further progress in the<br />
recovery.<br />
The RBA noted in its June statement that policy was appropriate<br />
for the “near term”. This appears to rule out any move in the<br />
coming months, especially in the context of volatility in global<br />
markets. However, likely strong Q2 growth should be enough to<br />
prompt a hike late in the year.<br />
The benchmark lending rate (12-month) should be left<br />
unchanged this year. However, given that housing prices are<br />
failing to correct, the government might hike the mortgage loan<br />
rate in Q4 10. Accordingly, the deposit rate might also be raised<br />
in order to keep the general interest spread unchanged.<br />
The BCB has become much more dovish, sounding more<br />
comfortable with the balance of risks for inflation on the heels of<br />
recent data. However, the monetary authority is likely to resume<br />
hiking rates in early 2011 to tame inflation expectations.<br />
Change since our last weekly in bold and italics<br />
Market Economics 23 September 2010<br />
Market Mover<br />
66<br />
www.GlobalMarkets.bnpparibas.com