• BOC, BOE and BNM left rate unchanged
• Central banks in US, UK, Japan, Taiwan, and Indonesia meet this week
• No major change in policy is expected

Last week the Bank of Canada (BOC), European Central Bank (ECB) and Bank Negara Malaysia (BNM) stayed the course regarding Monetary Policy for their economies. This week, the US Federal Reserve (Fed), Bank of Japan (BOJ), Bank of England (BOE), Bank Indonesia (BI) and Taiwan’s Central Bank of the Republic of China (CBC) get their chance to shine as they will meet to discuss interest rates and stimulus for their respective economies.

BOC, BOE and BNM left rate unchanged

The BOC left rates unchanged at 0.25% last week and will continue to buy at least CAD5.0bn per week of government bonds. In addition, BOC Governor said to expect extraordinary stimulus for as long as needed to help the nation fully recover from the crisis.

The ECB voted along the same lines. The interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility were left unchanged at 0.00%, 0.25% and -0.50%, respectively. Although Christine Lagarde said they are not targeting the value of the Euro (EUR), they are watching its appreciation. They will continue to buy EUR1.35tn worth of debt through June 2021. The ECB will also continue to provide ample liquidity through its refinancing operations. In particular, the latest operation in the third series of targeted longer-term refinancing operations (TLTRO III) has registered a remarkably high take-up of funds, supporting bank lending to firms and households. Meanwhile, according to the latest ECB’s staff projections. The Eurozone economy is now expected to contract by 8% instead of 8.7% as seen in June. Staff projections also point to stabilization of the rebound in 2021 at 5%, lower from the 5.2% projected earlier in June. On inflation, projection for 2020 remained unchanged at 0.3%, whilst 2021 was revised upwards to 1.0% and 2022 remained unchanged at 1.3%.

Source: BIMB Securities Research - 14 Sept 2020