FXStreet (Edinburgh) – The research team at BBH informs this week’s central banks’ meetings in the EM space.
Key Quotes
“Poland central bank meets Wednesday and is expected to keep rates steady at 1.5%. While Poland is still experiencing deflation (-0.9% y/y), we expect it to soon follow Hungary (0.5% y/y) and Czech Republic (0.7% y/y) in moving back to positive inflation. With the economy fairly robust, this argues for steady rate now”.
“Bank of Korea meets Thursday and is expected to keep rates steady at 1.5%. BOK’s Moon Woon last week argued that further rate cuts are not the right response to the MERS situation. Now the government is looking to get parliamentary approval for a supplementary budget. News reports suggest the package could be as large as KRW15 trln ($13.3 bln). We think markets would welcome this development if it materializes”.
“Malaysia central bank meets Thursday and is expected to keep rates steady at 3.25%. Markets breathed a sigh of relief that the country (for now) avoided a downgrade. Our own sovereign ratings model has Malaysia slipping into BBB+ territory and so we thought a one notch downgrade was justified. We don’t think the story is over just yet, especially with political risk picking up in the country. Lower oil prices are also unhelpful”.
“Peru central bank meets Thursday and is expected to keep rates steady at 3.25%. CPI inflation accelerated to 3.54% y/y in June from 3.37% in May, putting it further above the 1-3% target range. So despite the sluggish economy, rising inflation should keep the bank on hold for the time being. Lower copper prices are complicating matters, and appear on track to testing the cycle lows from January”.
(Market News Provided by FXstreet)