Monetary Policy Forecasts for Major Economies

Most major central banks have embarked on a policy of quantitative easing (QE). QE means that instead of targeting an interest or inflation rate that the bank force-feeds reserves into the banking system. The goal of QE is to inject reserves in the system sufficient to make credit available to all potential borrowers.

Event In March

March 4, 2009
•Reserve Bank of Australia: Expects a -50bp cut in the 3.25% Cash rate target.
•Move to an effective zero interest rate policy (ZIRP) = Unlikely
•Inflation not an issue.

March 6, 2009
•Bank of England. Expects a -50bp cut in the 1.00% repo rate.
•Move to an effective zero interest rate policy (ZIRP) = Likely
•Inflation not issue; economy very slow.

March 6, 2009
•European Central Bank. Expects a -50bps cut in the 2.00% refi rate.
•ECB likes to tighten policy but not to ease policy.
•ECB seen in denial as economy slows.