BOJ Hints at Rate Cut, SNB Ready to Intervene, BOE Warns About Brexit

The SNB left its base rate unchanged while cutting growth and inflation view. In doing so, it said it “remains willing to intervene in the foreign exchange market as necessary.” The BOE surprised no one when it held its policy rate unchanged at 0.75% in a unanimous vote. The BOJ kept monetary policy on hold but hinted at possible action in October.
James Hyerczyk
BoJ

The U.S. Federal Reserve (Fed) and the European Central Bank (ECB) deemed it necessary to cut rates in September, but other major central banks decided to keep policy on hold. The Fed was unclear about further rate cuts, but the ECB hit the markets with enough stimulus to suggest it was out of bullets. Meanwhile, Swiss National Bank (SNB), Bank of England (BOE) and the Bank of Japan (BOJ) policymakers decided to sit on their hands and watch how their domestic economies unfold given the outside threat of a global economic slowdown.

The SNB left its key policy rate and expansionary monetary policy unchanged, but said it “remains willing to intervene in the foreign exchange market as necessary.” The BOE held its policy rate unchanged at 0.75% with a unanimous vote. The BOJ kept monetary policy on hold but hinted at possible action in October.

Swiss National Bank

The SNB left its base rate unchanged while cutting growth and inflation view. In doing so, it said it “remains willing to intervene in the foreign exchange market as necessary.”

The SNB also said, “Negative interest and the willingness to intervene are important in order to counteract the attractiveness of Swiss Franc investments and thus ease pressure on the currency. In this way, the SNB stabilizes price developments and supports economic activity.”

The SNB also lowered its conditional inflation forecast for the current year to 0.4% from 0.6% in the previous quarter, and its growth forecast was cut to between 0.5% and 1% for 2019 as a whole, compared to around 1.5% in June.

Bank of England

The BOE surprised no one when it held its policy rate unchanged at 0.75% in a unanimous vote. Its asset purchase facility remained steady at 435 billion British Pounds as well.

BOE policymakers also reiterated their view that leaving the EU without an exit deal would slow growth and raise rates. They also warned that another delay to Britain’s departure date could lead to further economic weakness.

“It is possible that political events could lead to a further period of entrenched uncertainty about the nature of, and the transition to, the United Kingdom’s eventual future trading relationship with the European Union,” the BOE said in a press release.

“The longer those uncertainties persist, particularly in an environment of weaker global growth, the more likely it is that demand growth will remain below potential, increasing excess supply.”

Bank of Japan

The BOJ kept monetary policy on hold but hinted at possible action in October. Policymakers held overnight interest rates at minus 0.1 percent, its target for 10-year bond yields at around zero percent, and the pace of its asset purchases at 80 trillion Yen ($740 billion) a year.

The BOJ’s board voted for the decision by a majority of 7-2, with the dissents coming from policymakers who wanted greater stimulus.

Central bankers also gave an explicit warning that it was concerned about risks to the economic recovery and promised a review at its next meeting, after Japan’s consumption tax rises from 8 percent to 10 percent at the end of this month.

“With the slowdown in overseas economies continuing and downside risks on the increase, we judged it’s becoming necessary to pay closer attention to the possibility of losing momentum towards our price stability goal,” said Haruhiko Kuroda, BOJ Governor, in a press conference after the decision.

“Bearing that in mind, we’ll re-examine trends in activity and prices at our next meeting, when we publish our economic outlook report.”

Don't miss a thing!

Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All

Top Promotions

Top Brokers

IMPORTANT DISCLAIMERS
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
RISK DISCLAIMER
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.
FOLLOW US