Central banks, except perhaps the RBA, are set to leave rates on hold

By Trevor Williams, Chief Economist

Several major central banks take monetary policy decisions this week, but the most contentious could be the Reserve Bank of Australia, where interest rates may remain on hold at 4%, but with a significant risk of a quarter-point hike.

The RBA lately has increased the emphasis on a measured pace of tightening, having already raised rates from a low of 3% in the past six months. In contrast, the Bank of England, Bank of Japan and European Central Bank are all expected to leave interest rates firmly unchanged. Moreover, the BoE is not expected to change its asset purchase target at £200bn.

ECB President Jean-Claude Trichet may confirm the decision to continue to accept BBB- debt as collateral next year, as part of measures to support Greece.

No doubt he will try to convince the markets that policy frictions in the euro zone have been resolved, but investors may beg to differ, with Greece set refinance about €20bn of debt in this quarter alone.

Read more (PDF, 232 kB)

* All charts are sourced to Lloyds TSB Corporate Markets Economic Research, Bloomberg, IMF and Datastream

 


What do you think?

We are interested to hear your thoughts.

We do not publish email address information, this is only to confirm and validate your comments.





Your comments

We are not able to publish all comments submitted. All comments pass through a human review process before being published online.