Flash: Turning monetary policy cycles - Rabobank

FXStreet (Guatemala) - Analysts at Rabobank noted that on March 12 the market is expecting the RBNZ to be the first developed world central bank to hike interest rates in the current economic cycle.

Key Quotes:

“If is chooses to tighten policy the move will focus attention on what is likely to be a gradual wind down of extraordinary policy stimulus from major central banks in the coming years. Even so, a RBNZ rate hike would be in stark contrast to the policies currently being followed by other major central banks”.

“While the Fed is tapering the size of its monthly asset purchases programme, QE looks set to remain in place in the US at least until the end of the year”.

“In Japan, there is residual speculation that policy settings could yet be loosened further and, while the ECB’s steady policy decision this month appears to lessen the likelihood of further policy measures this year, disinflationary risks suggest it is still too early to completely rule further stimulation for the EZ economy. That said, if growth accelerates in the developed world in 2014 in line with the consensus view, the trend of monetary policy easing that still dominates the most major central banks could be in its dying throes”.

“The market is currently expecting the BoE to adjust interest rates higher in Q2 2015 and by the end of next year rate hikes may have been announced by the Riksbank, BoC, RBA and even the Fed and ECB. Even so, there is reason to expect that caution will dominate the outlook for developed world central banks for some time”.