September Central Banks Updates - Articles - Dukascopy Bank

Fri, 25 Sep 2020 10:55:20 GMT
Source: Dukascopy Bank SA
 

Central banks around the globe settled to follow the existing monetary policies to support the economic recovery during the coronavirus crisis.

Australia

On Tuesday, September 1, the Reserve Bank of Australia released its Rate Statement. The Board decided to keep the targets for the cash rate and the yield on 3-year Australian Government bonds of 0.25%.

Moreover, the Australian policymakers decided to increase the size of the Term Funding Facility – authorised deposit-taking institutions (ADIs) would have access to additional funding, equivalent to 2.00% of their outstanding credit, at a fixed rate of 25 basis points of three years. ADIs would be able to draw on this extra funding up until the end of June 2021.

Fundamental analysis for AUD/USD: RBA Rate Statement

Canada

On Wednesday, September 9, the Bank of Canada published the Rate Statement. The Canadian policymakers voted to maintain its target for the overnight rate at the effective lower bound of 0.25%.

Additionally, the Bank announced it was continuing its quantitative easing (QE) programme, with the large-scale asset purchases of at least $5B per week of Government of Canada bonds.

Fundamental analysis for USD/CAD: BOC Rate Statement

The European Union

On Thursday, September 10, the European Central Bank issued its Monetary Policy Statement. The Governing Council decided to keep the interest rate on the main refinancing and the interest rates on the marginal lending facility and the deposit facility unchanged at 0.00%, 0.25% and -0.50% respectively.

Moreover, the Governing Council will continue its purchases under the pandemic emergency purchase programme (PEPP) with a total envelope of €1,350B.

Additionally, net purchases under the asset purchase programme (APP) will continue at a monthly pace of €20B, together with the purchases under the additional €120B temporary envelope until the end of the year.

Fundamental analysis for EUR/USD: ECB Monetary Policy Statement

The US

On Wednesday, September 16, the Federal Reserve released the FOMC Statement. The Federal Open Market Committee voted to keep the target range for the federal funds rate at 0 to ¼ percent.

According to the official release: "The Committee expects to maintain an accommodative stance of monetary policy until these outcomes are achieved. In addition, over coming months the Federal Reserve will increase its holdings of Treasury securities and agency mortgage-backed securities at least at the current pace to sustain smooth market functioning and help foster accommodative financial conditions, thereby supporting the flow of credit to households and businesses."

Fundamental analysis for EUR/USD: FOMC Statement

Japan

On Thursday, September 17, the Bank of Japan issued the Monetary Policy Statement. The Board of the Bank decided to maintain negative interest rate of -0.10% on the Policy-Rate Balances in current accounts held by financial institutions at the Bank.

Moreover, the Bank will continue to purchase necessary amount of the Japanese government bonds (JGBs) without setting an upper limit so that 10-year JGB yields will remain at around 0%. Also, the Bank will continue to actively purchase exchange-traded funds (ETFs) and Japan real estate investment trusts (J-REITs).

The Bank announced it would continue with "Quantitative and Qualitative Monetary Easing (QQE) with Yield Curve Control", aiming to achieve the price stability target of 2%, as long as it is necessary for maintaining that target in a stable manner.

Additionally, the Bank will continue to support financing mainly of firms and maintain stability in financial markets through the Special Program to Support Financing in Response to the Novel Coronavirus.

Initial reaction on the market:

The UK

On Thursday, September 17, the Bank of England published its Monetary Policy Summary. The Monetary Policy Committee voted to maintain the Official Bank Rate at 0.10%.

According to the official release: "The Committee voted unanimously for the Bank of England to continue with its existing programmes of UK government bond and sterling non-financial investment-grade corporate bond purchases, financed by the issuance of central bank reserves, maintaining the target for the total stock of these purchases at £745 billion."

Fundamental analysis for GBP/USD: BOE Monetary Policy Statement

New Zealand

On Wednesday, September 23, the Reserve Bank of New Zealand issued its Rate Statement.

According to the official release: "The Monetary Policy Committee agreed to continue with the Large Scale Asset Purchase (LSAP) Programme up to $100 billion. This action is necessary to further lower household and business borrowing rates in order to achieve the Committee's inflation and employment remit. The Official Cash Rate (OCR) is being held at 0.25 percent in accordance with the guidance issued on 16 March."

Initial reaction on the market:

Switzerland

On Thursday, September 24, the Swiss National Bank released SNB Monetary Policy Assessment.

According to the Bank's statement: "The SNB is keeping the SNB policy rate and interest on sight deposits at the SNB at −0.75%. In view of the fact that the Swiss franc is still highly valued, the SNB remains willing to intervene more strongly in the foreign exchange market, while taking the overall exchange rate situation into consideration. The SNB continues to supply the banking system with generous amounts of liquidity via the SNB COVID-19 refinancing facility (CRF)."

Initial reaction on the market:


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