Hungary’s rising prices may shift monetary policy

2019 ◽  
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Euro Area ◽  
Federal Reserve ◽  
Content Type ◽  
Core Inflation ◽  
The Us ◽  
Manufacturing Sectors ◽  
National Bank

Significance The sharp slide in the forint is fuelling inflationary pressures, testing the resolve of the National Bank (MNB -- the central bank) to continue providing stimulus to the economy. Despite a surge in core inflation in Hungary to 3.8%, the MNB is using this year’s dovish U-turns by the ECB and the US Federal Reserve (Fed) as cover to keep monetary policy ultra-loose. Impacts The dollar index is strengthening despite the dovish U-turn by the Fed and is putting an end to the sharp rally in EM currencies in January. Inflationary pressures will be muted across the euro-area, with core inflation falling to 0.8% in March, less than half the ECB’s target. PMIs show Czech and Polish manufacturing sectors continuing to contract and Hungarian growth at its weakest level since 2016.

Leading central banks mould investor sentiment

2015 ◽  
Keyword(s):  
Central Bank ◽  
Federal Reserve ◽  
Developing Economies ◽  
Investor Sentiment ◽  
Oil Prices ◽  
Central Banks ◽  
Euro Crisis ◽  
Content Type ◽  
The Us ◽  
Country Specific

Significance In the worst start to a year for US equities since 2008, the benchmark S&P 500 index fell 0.7% during the week ending January 10. December's employment report showed US non-farm payrolls rising by a robust 252,000, but average hourly earnings declined, accentuating deflationary fears. The dollar continued to strengthen against the euro on concerns about a possible euro crisis over Greece and the introduction of sovereign QE by the ECB. With the US Federal Reserve preparing to raise rates, investor sentiment remains fragile. Impacts The tug-of-war between central bank largesse and country-specific, geopolitical and economic risks will become more intense. Markets will focus on renewed fears of 'Grexit' and on concerns about German opposition to an ECB sovereign QE programme. The relentless oil prices slide, exacerbated by the dollar's strength, will put further strain on EM assets. The ruble is likely to weaken further, increasing the scope for contagion to other developing economies.

Further Mexico rate hikes likely in 2018

2017 ◽  
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Interest Rates ◽  
Federal Reserve ◽  
Content Type ◽  
The Us ◽  
Wage Increases

Subject Monetary policy moves. Significance The Bank of Mexico (Banxico) increased its target interest rate by 25 basis points, to 7.25%, on December 14, responding to a similar move by the US Federal Reserve (Fed) the previous day. The hike was the first to be taken under new Governor Alejandro Diaz de Leon and pushes the rate to its highest level since March 2009. Impacts Tighter monetary policy will weigh on growth in 2018 and may hit the PRI’s electoral prospects. More expensive credit will hit consumption moderately, as interest rates remain relatively low by historical standards. The possibility of wage increases edging up will feed inflationary expectations.

Czech monetary divergence is set to end

2017 ◽  
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Interest Rates ◽  
Central Europe ◽  
Content Type ◽  
Core Inflation ◽  
Capital Outflows ◽  
Wait And See

Significance Hampl was interviewed on August 29, after the CNB announced its first rate rise in more than nine years on August 3. He said faster growth made debating further monetary policy tightening "relevant". A gradual period of normalisation in monetary policy across Central Europe (CE) seems to be under way. Impacts The CNB could raise rates sooner than expected if there is an unexpected rise in capital outflows. In Poland, weak core inflation is expected to encourage the central bank to retain its 'wait and see' stance regarding future rate rises. Hungary's central bank may be the last in the region to hike interest rates; no change is expected before mid-2018.

Indonesia will avoid economic crisis

2018 ◽  
Keyword(s):  
Monetary Policy ◽  
Federal Reserve ◽  
Presidential Election ◽  
Direct Investment ◽  
Current Account Deficit ◽  
Economic Nationalism ◽  
Content Type ◽  
Finance Minister ◽  
Global Trend ◽  
The Us

Subject Indonesia's economic headwinds. Significance Finance Minister Sri Mulyani Indrawati last week said the US Federal Reserve (Fed) should be careful about how its policies affect emerging markets. Tightening US monetary policy and a global trend of trade protectionism is straining Indonesia’s currency and current account deficit. President Joko ‘Jokowi’ Widodo will be eager to demonstrate that he can handle Indonesia’s economic challenges ahead of the presidential election in April 2019. Impacts Sri Mulyani’s message to the Fed is unlikely to have much traction in Washington. The force of economic nationalism will hinder Indonesia’s efforts to court more foreign direct investment. US trade reprisals on Indonesia would damage Washington-Jakarta diplomatic ties.

scholarly journals Warehousing: A Historical Lesson in Central Bank Independence

2017 ◽  
pp. 1-4 ◽  
Author(s):  
Owen F. Humpage
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Foreign Exchange ◽  
Federal Reserve ◽  
Institutional Arrangement ◽  
Central Bank Independence ◽  
The Us ◽  
Foreign Exchange Exposure

This Economic Commentary explains how warehousing—a seemingly innocuous institutional arrangement between the Federal Reserve and the US Treasury—came to threaten the Fed’s independence. Warehousing began as an arcane procedure designed to help the Treasury cover a specific type of foreign-exchange exposure. It then grew into a supplemental source of funding for the Treasury's foreign-exchange interventions. Eventually the procedure morphed into a sizeable off-budget source of funding for other Treasury activities and seemed an inappropriate subversion of the congressional appropriations process, a development that raised concerns within the Fed about its ability to conduct monetary policy free from political concerns.

Room for more rate cuts is limited in Central Europe

2016 ◽  
Keyword(s):  
Monetary Policy ◽  
Global Economy ◽  
Policy Implications ◽  
The Czech Republic ◽  
Content Type ◽  
Core Inflation ◽  
Market Sentiment ◽  
Financial Conditions ◽  
Downward Pressure ◽  
National Bank

Subject Policy implications of the downward pressure on inflation from the renewed oil price decline. Significance The National Bank of Poland (NBP) is under the most pressure to loosen monetary policy further, as the country's core inflation turned negative in January 2016, whereas in Hungary and the Czech Republic, core inflation remains in positive territory. Although the Hungarian Central Bank (MNB) has introduced a range of unconventional measures aimed at giving it greater control of short-term market rates without changing its benchmark rate, it has reached the limits of ultra-loose monetary policy, with fiscal loosening supplanting monetary easing as the main source of stimulus. Impacts Brexit's financial fallout is likely to stay contained, with equity markets rallying and gauges of financial volatility at historical lows. Germany's economy is likely to remain resilient post-Brexit, its composite purchasing managers' index rising to a seven-month high. This bodes well for Central Europe's economies, despite a recent slowdown in growth. Investors are losing confidence in the credibility and effectiveness of global monetary policy. However, very loose financial conditions in the global economy, particularly in Europe and Japan, will keep market sentiment favourable.

Cabinet chaos raises junk status risk for South Africa

2015 ◽  
Keyword(s):  
Higher Education ◽  
South Africa ◽  
Monetary Policy ◽  
Federal Reserve ◽  
Content Type ◽  
Student Protests ◽  
Investor Confidence ◽  
The Us ◽  
Intelligence Agencies

Significance He replaces the little known David van Rooyen, who had been in post for only four days following the axing of technocrat Nhlanhla Nene. The nature of the latter's removal shook investor confidence unprecedentedly for post-apartheid South Africa. Impacts Economic turmoil caused by Nene's axing could embolden ANC factions pushing for Zuma to resign before the next poll in 2019. However, Zuma may use his hold on the intelligence agencies to undermine opponents, eg by uncovering personal scandals. Expected monetary policy tightening by the US Federal Reserve will likely undermine any rand appreciation caused by Gordhan's appointment. Recent student protests could encourage Zuma to dismiss Higher Education Minister Blade Nzimande, weakening the SACP.

Hungarian forint is increasingly vulnerable to attack

2020 ◽  
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
External Environment ◽  
Central Banks ◽  
Content Type ◽  
China Trade ◽  
Bond Yield ◽  
The Us ◽  
National Bank ◽  
Global Growth

Subject Central banks’ policy dilemmas. Significance The National Bank of Hungary (MNB) remains extremely reluctant to raise interest rates despite increasing pressure on the forint. While growth in the euro-area is likely to remain weak this year, strengthening the case for rates to remain on hold, a more supportive external environment, underpinned by an easing of US-China trade tensions, would accentuate the policy dilemmas confronting Central Europe’s central banks, especially given rises in inflation. Impacts Germany’s still-negative ten-year bond yield has risen from record lows in September as markets become less pessimistic about global growth. Markets expect Hungarian monetary policy to remain very dovish, as the domestic twelve-month bond-yield’s end-October turn negative shows. The US S&P 500 index surged by nearly 30% last year and if US-China trade tensions ease slightly this should help it to maintain momentum.

Hungary’s monetary stance may weaken forint further

2020 ◽  
Keyword(s):  
Member State ◽  
Euro Area ◽  
Consumer Confidence ◽  
Content Type ◽  
The Us ◽  
National Bank ◽  
Second Wave ◽  
The Eu

Significance Hungary’s financial and economic woes are deepening amid a second wave of COVID-19 infections, which is undermining business and consumer confidence, and threatening to derail the incipient recovery. The deterioration in the growth outlook is putting further pressure on the forint; currency weakness is in turn stoking inflation, posing an acute policy dilemma for the Hungarian National Bank (MNB). Impacts The ECB is under pressure to continue monetary stimulus against deflation in the euro-area which faces a virus-induced double-dip recession. Expectations of an easing in geopolitical tensions if Democrats take both the US presidency and Congress are benefiting most EM currencies. The need to get the EU pandemic recovery fund through the European and member-state parliaments is reducing pressure on Hungary and Poland.

Monetary policy and redistribution: information from central bank balance sheets in the Euro area and the US

2013 ◽  
Vol 64 (3) ◽  
Author(s):  
Philippine Cour-Thimann
Keyword(s):  
New York ◽  
Monetary Policy ◽  
Central Bank ◽  
Euro Area ◽  
Financial Sector ◽  
Central Banks ◽  
Balance Sheets ◽  
The Us ◽  
Bank Balance Sheets ◽  
Redistributive Effects

AbstractThe exceptional measures by central banks during the financial crisis have led to renewed interest in the redistributive effects of monetary policy. This paper adopts the perspective of central bank balance sheets to assess such effects. It uses information from the euro area National Central Banks and the US Federal Reserve Banks to analyse the regional and sectoral effects of monetary policy. Central bank balance sheets capture sustained imbalances in payment flows across the euro area countries that peaked at 10% of GDP in the so-called Target balances, and across the US districts that reached 5% of GDP in the equivalent Interdistrict Settlement Accounts. These imbalances, combined with accommodative central bank liquidity, shifted risks from the private financial sector to the public sector and among taxpayers - yet, mechanisms are in place to mitigate such risks and the associated redistributive effects. The liquidity injection, while directly channelled at the stressed regions or sectors, has indirectly supported the financial sector at large. In different institutional contexts, the financial centres in Germany and in the New York district have been strengthened. They have been net recipients of payment inflows from the rest of the respective currency areas, equivalent in amounts to a third of the liquidity injection during the crisis.

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