Global policy rates: Changes to current policy rates and forecasts – HSBC

Research Team at HSBC, lists down the changes to rates and HSBC forecasts for the global policy rates.

Key Quotes

“In the US, We recently cut our forecast for US 2016 average growth to 1.8% from 2.0% on the back of the impact of disappointing global growth, financial market turmoil, and continued weakness in the oil and commodity sectors. Given the FOMC’s data-dependency, we expect the Committee to refrain from a rate hike at its June meeting. Instead, we believe a hike will come in September. This means we now forecast only one, not two, 25bp hikes for 2016. We expect that two 25bp rate hikes will still be delivered in 2017, probably one each in March and September, keeping the spacing between rate hikes at six months..

In the UK, Growth in 2016 has softened by more than we expected. We now forecast growth of just 0.2% q-o-q in Q2 (previously 0.4%). The BoE's latest inflation forecasts were only slightly above target two-years ahead, despite being conditioned on a yield curve that didn't price in a full 25bp rate rise until 2019. This suggests the MPC is in no hurry to tighten. We now expect the first 25bp UK rate rise in May 2017 rather than in November 2016.

In Chile, we see economic activity subdued, the labour market easing and limited currency depreciation reducing inflationary pressures. The Central Bank continues to signal the need to 'normalize' policy rates eventually, but we believe hikes won't take place in the near future.

In Colombia, the rebound of EM assets and currencies together with the phasing-out of supply-side shocks that contaminated inflation expectations could allow the Central Bank of Colombia to maintain rates stable at 7.0% after surprising analysts with a 50bp hike in the April monetary policy meeting. We expect BanRep to keep rates unchanged at 7.0% for the foreseeable future with inflation subsiding and also as the need to continue adjusting the external deficit -less pressing than a couple of months ago- still remains.”