Monetary Policy
The ECB hiked as expected, but further tightening would be a mistake that ultimately supports European bonds. The policy rate was raised by 25 bps to 2.25%, as expected. The ECB also revised its inflation forecasts higher and its growth forecasts lower. It…
The Bank of Canada kept rates unchanged and still sees two-sided risks around the inflation outlook. The policy rate was left at 2.25% for a fifth consecutive meeting, in line with expectations. At 2.25%, it remains at the bottom of the BoC’s estimated…
Australia's May NAB survey pointed to softer growth, with moderating price pressures reinforcing the case that the RBA's tightening cycle is over. Business conditions held steady at +3, firmly below the long-term average, after falling every month this year.…
The Bank of Canada left rates unchanged and emphasized inflation risks from higher oil prices. We discuss why inflation and labor market data argue against the tightening currently priced.
Bank Indonesia’s off-cycle rate hike was a defensive move to slow the rupiah’s slide, not a change in the broader policy story. After raising its policy rate to 5.25% at last week's scheduled meeting, the Indonesian central bank surprised with an unscheduled…
A notable pattern is emerging globally: inflation remains above target, but it is coming in cooler than consensus expected. US inflation came in below estimates. The same pattern has appeared in European developed and emerging markets, including Switzerland…
Japan’s May Eco Watchers Survey beat estimates, pointing to resilient growth despite the Middle East conflict. Both the current conditions and outlook indexes rose more than expected, to 43.6 from 40.8 and to 40.7 from 39.4, respectively. Both had plunged in…
BCA’s Global Investment Strategy team challenges Fed Chair Kevin Warsh's view that AI will prove disinflationary, particularly on the near-term inflation impact. Our colleagues argue AI is currently pushing up costs across a range of inputs, including power…
The AI boom will increase inflation in the near term and could also raise it over the long term. The Fed’s reluctance to hike rates is understandable, but it risks amplifying what may already be a brewing stock market bubble.
The cyclical outlook for the US dollar is improving and reinforces positioning for further dollar strength in the near term against energy importers. As a net energy exporter, the US economy remains more resilient to the terms-of-trade shock and the risks of…