April 22, 2021
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ECB: middle ground behind the world

  • The ECB announced no policy changes again at its April meeting, with purchases continuing at their faster pace. There doesn’t seem to have been much economic pressure on its February forecasts so far and financial conditions have behaved.
  • PEPP purchases are occurring at the middle-ground pace between their initial surge and recent lull. This pace could slow as soon as June but a more likely continuation to September still wouldn’t threaten the parameters for the program’s current envelope.

March 18, 2021
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Norges Bank: The end of ZIRP

  • The Norges Bank MPC unsurprisingly kept the policy rate at zero, however, the real news is the introduction of tightening pressure within its 2021 policy rate projections. Such hawkish revisions were flagged by our model as a reflection of reduced spare capacity.
  • There are three reasons for the Norges Bank’s hawkish stance: an improvement in global economic prospects; the vaccination rollout in Norway is proceeding faster than expected; ZIRP with an overheating housing market is an inappropriate combination.

March 18, 2021
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BoE: taper-ready for May

  • The BoE MPC voted unanimously in favour of no policy changes, as widely expected, and its asset purchase pace will remain unchanged. It sees “flexibility to slow the pace of purchases later” and we still expect that to occur when this is next reviewed in May.
  • Optimism still prevails at the Bank and it will take time for our gloomy call on the long term damage to become clear. That makes rate hikes a remote prospect and raises the risk of an extension to QE beyond Nov-21 when we expect the tapered pace to end.