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Analysts at TD Securities point out that at the last MC meeting on 19 June, all rates were kept on hold as expected and the current loose monetary policy maintained.

Key Quotes

“However, for the first time the NBH signaled that this will not go on indefinitely, saying that “the current loose monetary conditions can no longer prevail up to the end of the 5 to 8-quarter horizon of monetary policy” and that “the current volatile international environment suggests a more cautious approach“. They also said that in the coming months the CPI inflation rate will temporarily move above 3% as a result of the rise in oil prices, but that it will moderate and the 3% target will still only be reached “sustainably” by mid-2019. Indeed June headline inflation moved up to 3.1% from 2.8%, but core remained at 2.4%.”

“At today’s meeting all rates are almost certainly going to be left unchanged. We do not expect the MC to announce any changes to any of its current program of “unconventional” easing measures. Nor do we expect any substantial change in language in the press statement compared to June.”