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14th Oct 2021  –   09:30 am

NFP September 2021

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Jackson Hole Response August 2021

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30th Aug 2021  –   02:36 pm

Given the lockdowns that were imposed in August and sharp fall in PMI surveys, what do you expect China GDP growth for 2021 to be?

Thank you for your input!


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UFI 19-Sep-21

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07th May 2021  –   10:36 am

Reserve Bank of India

In its policy meeting in August, the Monetary Policy Committee (MPC) voted unanimously to maintain status quo on policy rates and keep its state based accommodative stance in place. In line with our expectations, the RBI has increased the size of the VRRR. However, the RBI governor has underscored that the higher VRRR auctions should not be misread as a reversal of the central bank’s accommodative monetary policy stance or a tightening measure.

Overall, the policy had a lesser dovish underpinning than the previous one in June. Going forward, we expect the RBI to keep the repo rate unchanged over FY2022. However, we maintain our projections of a normalization in the Liquidity Adjustment Facility (LAF) corridor with a two-step hike in the reverse repo rate starting possibly around December 2021.

Additionally, the RBI/MPC can be expected to continue using unconventional policy tools, such as GSAPs and OTs to avoid any untoward surge in yields. Given the need to continue to keep yield movements compatible with the monetary policy stance, we see scope for GSAP 3.0 program to get announced in the October policy meeting.

Federal Reserve

In the latest policy meeting in September, the FOMC maintained status and provided further indications that it is poised to commence tapering in Dec, 2021. It lowered its GDP growth projections for 2021, but kept them unchanged over 2022-24. Inflation projections were raised across the forecast horizon. The dot plot showed an even split of members voting for status quo and 25 bps hike for 2022. The dot plot showed that the median FOMC members expect policy rates to be hiked by 75 bps in 2024.

For the November policy meeting, we expect the FOMC to provide a time-table for the QE taper and guidance that QE could end by mid-2022. We expect a hawkish message on inflation and policy rate trajectory.

We think that the FOMC will begin tapering in December and slowly prepare markets for rate hikes from Q42022 onwards.

Bank Of England

In its latest policy meeting in September, the BoE made a hawkish pivot by stating that the case for monetary tightening had increased from the previous meeting in August. There was also a 7-2 split on QE, with two members of the MPC voting to end QE as early as Sep, 2021.

In the next policy meeting in November, we expect the BoE to provide a guidance on its monetary tightening plans for 2022. We also expect some downgrades to be made to the GDP projections.

We expect the BoE to hike rates by 10 - 20 bps over 2022, but keep the size of its balance sheet stable over this period.

European Central Bank

In its latest policy meeting in September, the ECB recalibrated its PEPP programme indicating that the pace of purchases will slow from EUR 80 billion per month to possibly ~EUR 60 - 70 billion per month. However, it continued to indicate that the monetary policy will remain accommodative over 2021-24, based on the medium-term inflation profile.

In its next policy meeting in October, we expect the ECB to provide a neutral message, by maintaining its accommodative framework in place.

We expect the ECB to end its PEPP programme on schedule by Mar, 2022 but increase the size of its open-ended monthly QE programme from EUR 20 billion to EUR 50 - 60 billion. Guidance that the policy rates will remain at around current record low levels, are likely to remain in place.

People's Bank of China

As Chinese growth momentum, particularly private consumption and service activity, has been softer than expected in 2021, the PBOC delivered a Required Reserve Ratio cut of 50 bps to stimulate demand in July. However, this was a one-off measure and does not imply a beginning of a new easing cycle.

We expect the PBOC to keep policy accommodative by cutting the RRR by another 50 bps and continuing to inject liquidity, to tackle the strain from Evergrande.

After keeping the policy accommodative over 2021 and Q12022, we see the PBOC gradually moving to a neutral regime.

Over the years we have found ICICI bank Research to be quite insightful and actionable. The statistical and quant based observations in particular are unique and lend interesting perspectives. Forward looking research helps in forming a cross asset view.

TCS Treasury

Tata Consultancy Services

The research reports are very well structured, ideas clear and writing concise and argumentative. The literature review is comprehensive and you manage to successfully discuss the importance of your research, from a theoretical and an applied perspective.

HCL Technologies

Treasury @ HCL Technologies
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