Latest news with #interestRateCut
Bloomberg
2 hours ago
- Business
- Bloomberg
RBI Opted For Outsized Rate Cut to Boost Growth, Minutes Show
India's central bank governor said that front-loaded interest rate cut and the cash boost would support the Indian economy amid global uncertainties, minutes of the central bank's monetary policy meeting showed Friday. The Reserve Bank of India's rate-setting panel delivered an out-sized 50 basis points interest rate cut earlier this month and announced a liquidity measures for the banking system. The six-member monetary policy committee also simultaneously shifted its policy stance to neutral from accommodative, indicating limited room for further easing.
Free Malaysia Today
12 hours ago
- Business
- Free Malaysia Today
Norway's central bank announces surprise rate cut
Norges Bank lowered its policy rate by a quarter point to 4.25% and said it could make another cut this year. (Reuters pic) OSLO : Norway's central bank announced a surprise interest rate cut today, citing economic uncertainty linked to trade tensions and escalating conflicts. Norges Bank lowered its policy rate by a quarter point to 4.25% and said it could make another cut this year 'if the economy evolves broadly as currently projected'. The bank had kept its rate unchanged since December 2023 after hiking them in efforts to tame inflation. Analysts had expected the bank to keep its rate unchanged until September. Norges Bank governor Ida Wolden Bache said inflation had declined since its March monetary policy meeting. 'The inflation outlook for the coming year indicates lower inflation than previously expected,' she said. 'A cautious normalisation of the policy rate will pave the way for inflation to return to target without restricting the economy more than necessary.' Core inflation – which excludes volatile energy prices – slowed to 2.8% in May. While it is cooling, inflation remains above the central bank's 2% target. The rate cut comes as financial markets worry about the economic impact of US President Donald Trump's tariffs and the conflict between Israel and Iran. 'The uncertainty surrounding the outlook is greater than normal,' Norges Bank said in a statement. 'An escalation of conflicts between countries and uncertainty about future trade policies may result in renewed financial market turbulence and could impact both Norwegian and international growth prospects,' it said. 'If the economy takes a different path than currently envisaged, the policy rate path may also differ from that implied by the forecast,' the bank added.
Yahoo
a day ago
- Business
- Yahoo
Instant view: Norway's central bank delivers surprise rate cut
LONDON (Reuters) -Norway's central bank cut its policy interest rate by 25 basis points to 4.25% on Thursday, its first reduction of borrowing costs in five years, in a decision that took most analysts by surprise. Norway's crown and government bond yields tumbled. The dollar was up over 1% against the Norwegian currency, fetching 10.05 crowns, on track for its biggest daily rise in eight weeks. The euro was up 0.8% and was trading at 11.54 crowns. Norwegian government bond yields fell as much as 10 basis points after the decision to 3.95%, their lowest since May 12. COMMENTS: KIT JUCKES, HEAD OF FX STRATEGY, SOCIETE GENERALE, LONDON: "My first piece of frustration is that is that between their sovereign wealth fund and their monetary policy, they manage to not have a super-strong currency, that is really what they've managed to do. It's never quite as strong as you think it ought to be, but it's never quite cheap enough either." "There are a lot of countries that live with highly valued currencies and there are plenty that don't benefit from lowly valued currencies in the big scheme of things. What policymakers loathe is currencies that move quickly and mess up their inflation target. "In this trade war period, they are runaway top currency." "We're going to write this on down as being one of those unsurprising, surprises that really annoy us." OEYSTEIN DOERUM, CHIEF ECONOMIST, NORWAY'S CONFEDERATION OF NORWEGIAN ENTERPRISES, OSLO: "Not only did the cut come earlier than expected, the interest rate path has also been lowered in the short term, and prices are now almost in for another rate cut, to 4%, at the September meeting, and a high probability of another cut, to 3.75%, at the December meeting. After that, the interest rate will fall to 3% by the end of 2028, which is actually slightly higher than indicated in the March report. "In any case, this is good news for all indebted households who can take a vacation with a slightly lighter burden on their backs, and it will provide some support to the housing market and thus to a construction industry that has been struggling for a long time. "The main justification is that inflation has fallen somewhat faster than Norges Bank envisaged in March. The (2%) target is in sight. But the central bank remains vigilant: if wage and price growth remain higher than projected, there will be fewer interest rate cuts. In that case, just note the bank's wage projections for the years 2026-28, 4.1%, 3.6% and 3.3%, respectively. "It is also pleasing that the interest rate path is being adjusted downward despite the fact that mainland growth for this year is being increased, by four tenths, to a still modest 1.6%, close to our estimate. And that unemployment is expected to remain at relatively low levels. "If this is the outcome, Norges Bank will have helped steer the Norwegian economy towards a soft landing, after the largest external cost shock in almost fifty years." LEE HARDMAN, SENIOR CURRENCY ANALYST, MUFG, LONDON: "The timing is surprising, we thought that they would wait a little longer, they hadn't been giving a strong signal that they would cut rates as soon as today, that's why the market has reacted as it has. "Their justification is that underlying inflation is softer than expected creating more room for them to cut rates. "The other part of the messaging is that the overall profile for rate cuts going forward hasn't changed a great deal, just the timing, so from that perspective that could dampen the sell off in the (Norwegian crown) once the dust settles and market participants get over the initial shock." JAN VON GERICH, CHIEF MARKET STRATEGIST, NORDEA, HELSINKI: "This was not something was expected by analysts but given an uncertain outlook you shouldn't exclude any outcomes. "Given that this was surprise, the move could have been bigger in the crown. "They are (Norges Bank) talking about normalisation, so today's move suggests that this process is happening faster-than-expected. "The Fed now seems to be the odd one out in global central banks." MICHAEL BROWN, SENIOR RESEARCH STRATEGIST, PEPPERSTONE, LONDON: "It was clearly a surprise, the Norges Bank was the last hold out when it comes to hawkishness among G10 central banks. "They hadn't actually pencilled a rate cut until the Autumn so I think it may just be a sign that they're shifting to a more proactive approach. "And given all the uncertainty that we see, they're probably in quite a luxurious position where they feel if they deliver a cut now they can perhaps head off some potential weakness that may be coming down the track in the next couple of quarters. "It's really a nod to a more proactive Norges Bank from here on out."
Yahoo
a day ago
- Business
- Yahoo
SNB Cuts Interest Rate to Zero in Effort to Stop Franc Inflows
(Bloomberg) -- The Swiss National Bank cut its interest rate to zero, seeking to deter investors from pushing up the franc. Security Concerns Hit Some of the World's 'Most Livable Cities' JFK AirTrain Cuts Fares 50% This Summer to Lure Riders Off Roads Taser-Maker Axon Triggers a NIMBY Backlash in its Hometown How E-Scooters Conquered (Most of) Europe NYC Congestion Toll Cuts Manhattan Gridlock by 25%, RPA Reports The quarter-point reduction on Thursday is the sixth consecutive move by officials, and was forecast by most of the economists surveyed by Bloomberg after the currency's strength caused consumer prices to drop for the first time in four years. A minority anticipated an even bigger half-point step. 'With today's easing of our monetary policy, we are countering the lower inflationary pressure,' President Martin Schlegel said in Zurich. 'We will continue to monitor the situation closely and adjust our monetary policy if necessary' he said, adding that 'we remain willing to be active in the foreign exchange market as necessary.' The cut underscores just how far US President Donald Trump's disruption to global trade is impacting Switzerland. Schlegel and colleagues had signaled as recently as March that they were probably finished with easing, but the currency's role as a haven from turmoil forced their hand. The Swiss franc rose as much as 0.2% to the day's high of 0.9387 versus the euro after the announcement, reflecting hope from some market participants that the SNB would take a more aggressive step and cut by 50 basis points. Investor alarm at the impact of US policies prompted such inflows in the past quarter that the franc touched a decade-high against the dollar, pushing the inflation rate below below zero for the first time since early 2021. Since April, the haven currency has traded in range around 0.92, benefiting from demand induced by the broad selloff in the dollar. Against a basket of currencies, the franc has gained nearly 2% so far this year. The Swiss move contrasts with the wait-and-see approach taken by most global peers. On Wednesday, the Federal Reserve kept its rate unchanged, and the Bank of England may do so too later on Thursday. Officials at the European Central Bank have signaled a pause for now after a series of reductions. Still, Norway's central bank surprised with a cut on Thursday as well. Specter of Negative Rates By going as low as zero, SNB officials are not only ending more than 2 1/2 years of positive rates, but also setting the lowest benchmark of any major central bank. They're also experimenting with a specific level that the central bank never tested when it adopted negative borrowing costs, neither on the way down, nor going up again. That will challenge Swiss banks, as it eliminates income from deposits while also compressing margins on loans and mortgages. If pressure on the franc persists, officials have the option of going below zero, which the SNB already did from 2014 to 2022. Schlegel has said that 'no one likes' such a measure but that policymakers are ready to do so if needed. A minority of economists reckon such a move could transpire as soon as this year. Schlegel on Thursday acknowledged that the rate move brings borrowing costs 'to the verge of negative territory.' 'We are also aware that negative interest rates do have undesirable side-effects and presents challenges for many economic agents,' he said. What Bloomberg Economics Says... 'The SNB's next move is difficult to anticipate given the high level of trade, growth and currency uncertainty, but all in all, we would pencil an additional 25-bp cut in September, lowering the policy rate to negative territory. The risks are tilted toward a longer period of ZIRP, giving the SNB more time to assess the macroeconomic impact of a strong franc.' —Jean Dalbard, economist. For full react, click here Economists at ODDO BHF said that they see a high probability of another 25 basis point cut in September. Such a 'return of negative rates aims to curb the appreciation of the Swiss franc and boost domestic credit,' they said. 'The SNB is likely to reintroduce partial exemption mechanisms to protect domestic banks, while having a more direct impact on foreign capital flows.' Swiss stocks fell as much as 1.1% on Thursday. While lower rates are supportive for exporters, a strong franc, zero rates and a flat yield curve tend to be a headwind for banks and financials stocks, which make up about a fifth of the market benchmark. Franc Watch The other way to weaken the franc would be to restart currency interventions, but that brings risks of its own. The US branded the Swiss a manipulator during Trump's first term, and earlier this month, the Treasury added Switzerland to a list of economies subject to monitoring for exchange-rate policies. SNB officials have said that they will use the tool if necessary, but shirked from large-scale market action for all of last year. For now, one source of relief for the central bank may come from the increase in crude oil costs after hostilities erupted between Israel and Iran. Even so, its outlook still points to weak consumer-price pressures that are likely to keep officials concerned. On Thursday, they lowered their forecast for inflation this year, expecting it to average 0.2% in 2025, 0.5% in 2026 and 0.7% in 2027, after it was previously seen at 0.4%, 0.8% and 0.8%, respectively. Against some expectations they kept intact their outlook for Switzerland's economy despite US tariffs. After the strongest expansion in two years last quarter due to front-loading of exports, the SNB still expects growth in a range of 1%-1.5% this year. Earlier this week, the government published a forecast for 1.3%. Schlegel and his two peers on the central bank's board will address reporters at 10 a.m. in Zurich and will likely be quizzed about the future path for Swiss rates given geoeconomic uncertainties. Another topic of interest could be the SNB's decision to maintain its system of remunerating reserves, in which it pays banks full interest only on deposits up to a institution-specific limit. For parked cash above that, lenders get the policy rate minus 25 basis points, which means that there's now negative interest on such excess reserves. --With assistance from Jan-Henrik Förster, Paula Doenecke, Levin Stamm, Harumi Ichikura, Joel Rinneby, Fergal O'Brien, Allegra Catelli and Aline Oyamada. (Updates with BE comment, stock market reaction) Ken Griffin on Trump, Harvard and Why Novice Investors Won't Beat the Pros Is Mark Cuban the Loudmouth Billionaire that Democrats Need for 2028? The US Has More Copper Than China But No Way to Refine All of It How a Tiny Middleman Could Access Two-Factor Login Codes From Tech Giants Can 'MAMUWT' Be to Musk What 'TACO' Is to Trump? ©2025 Bloomberg L.P. Sign in to access your portfolio
Reuters
a day ago
- Business
- Reuters
VIEW Norway's central bank delivers surprise rate cut
LONDON, June 19 (Reuters) - Norway's central bank cut its policy interest rate, opens new tab by 25 basis points to 4.25% on Thursday, its first reduction of borrowing costs in five years, in a decision that took most analysts by surprise. Norway's crown and government bond yields tumbled. The dollar was up over 1.5% against the Norwegian currency, fetching 10.08 crowns , on track for its biggest daily rise in eight weeks. The euro jumped 0.9% and was trading at 11.56 crowns . Norwegian government bond yields fell as much as 10 basis points after the decision to 3.95%, their lowest since May 12. COMMENTS: LEE HARDMAN, SENIOR CURRENCY ANALYST, MUFG, LONDON: "The timing is surprising, we thought that they would wait a little longer, they hadn't been giving a strong signal that they would cut rates as soon as today, that's why the market has reacted as it has. "Their justification is that underlying inflation is softer than expected creating more room for them to cut rates. "The other part of the messaging is that the overall profile for rate cuts going forward hasn't changed a great deal, just the timing, so from that perspective that could dampen the sell off in the (Norwegian crown) once the dust settles and market participants get over the initial shock." JAN VON GERICH, CHIEF MARKET STRATEGIST, NORDEA, HELSINKI: "This was not something was expected by analysts but given an uncertain outlook you shouldn't exclude any outcomes. "Given that this was surprise, the move could have been bigger in the crown. "They are (Norges Bank) talking about normalisation, so today's move suggests that this process is happening faster-than-expected. "The Fed now seems to be the odd one out in global central banks." MICHAEL BROWN, SENIOR RESEARCH STRATEGIST, PEPPERSTONE, LONDON: "It was clearly a surprise, the Norges Bank was the last hold out when it comes to hawkishness among G10 central banks. "They hadn't actually pencilled a rate cut until the Autumn so I think it may just be a sign that they're shifting to a more proactive approach. "And given all the uncertainty that we see, they're probably in quite a luxurious position where they feel if they deliver a cut now they can perhaps head off some potential weakness that may be coming down the track in the next couple of quarters. "It's really a nod to a more proactive Norges Bank from here on out." KENNETH BROUX, HEAD OF CORPORATE RESEARCH FX AND RATES, SOCIETE GENERALE, LONDON: "Surprise is the right word, I think the scale of the recent appreciation of the krone (bear down on inflation) gives them a bit more confidence and brings forward today's cut. They lowered the CPI forecast for 2026 by 0.5 percentage points to 2.2% and 2027 by 0.2 percentage points to 2.3%."
