Coming Up – Norges Bank, Banxico, BoN and BoU Interest Rate Decisions

Stockholm (Ekonamik) – This week, the central banks of Namibia (BoN), Norway (Norges Bank), Uganda (BoU) and Mexico (Banxico) will meet to decide interest rates. In data news, 2019Q2 GDP figures will be published for Germany, the Eurozone and Russia this week. Australia, France, South Korea, Turkey and the UK will also publish unemployment data.

Analysts seem to agree that Norges Bank is not about to implement any policy change. Whereas most of the world is on a dovish path, Norges Bank is not in synch. “Norges Bank is widely expected to keep its policy rate on hold at its upcoming meeting, at 1.25 percent. The big question is whether it will offer a signal that it intends to raise its policy rate in September, or whether it prefers to adopt a wait-and-see approach,” said Kari Due-Andresen, Chief Economist for Norway at Handelsbanken Capital Markets. “We believe the latter is more likely to happen. In the key policy rate trajectory, there is a likelihood of around 70 percent of another rate hike in September, and the hike is fully incorporated by the end of the year” added Andresen. At Swedbank, the sentiment was similar.  “The key policy rate will be kept unchanged at the 15 August interim monetary policy meeting,” agreed Øystein Børsum, Chief Credit Strategist & Chief Economist at Swedbank Research Norway. “At the same time, we expect Norges Bank to more or less echo their statement from the May meeting, stating that the policy rate “most likely” will be raised in September to 1.50%.”

At the June meeting of Banxico, only one of the five-member monetary policy board, Gerardo Esquivel, voted in favour of a rate cut. Since then at least another of his colleagues has joined the fray, and others might follow, in the heels of last week’s rate cut by the Fed. Carlos Serrano, Chief Economist at BBVA, noted that given the slow pace of the Mexican economy, “it would appear that Banco de México is about to initiate a cycle of reductions that should help to eliminate headwinds against the economy,” although he did not specify whether the cut would take place now or later. Andre Manuel Lopez Obrador (AMLO), the popular Mexican president expressed his preference for an interest rate cut in a recent interview. However, according to a report by the Financial Post, “eleven of the 16 analysts and economists surveyed by Reuters said they expect the Bank of Mexico (Banxico) to keep the key lending rate at 8.25%, the level it has maintained since Dec. 20.”

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