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Policy surprises again

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  • The FOMC will struggle through snow and ice to deliver their verdict on policy today. In actual fact, they could probably stay at home as in the absence of a press conference we are not expecting a significant change in policy expectations this month (while still steering a course towards a mid-year tightening).
  • One Anglos-Saxon country that is defying the trend is Australia, where the global headwinds (read "commodity prices") have weakened the growth outlook. We now see the Reserve Bank easing rates in March and May of this year.
  • Singapore has clearly been taking Swiss lessons, with the MAS offering a surprise easing of policy today (appreciating the currency more slowly). An easing was expected this year, but not right now. The trend of surprising policy announcements with the risk of creating market volatility is a little troubling.
  • There is little in the Euro zone beyond the ongoing process of getting to know the new Greek government. Statements yesterday were again conciliatory as to the extreme and highly unlikely risk of Euro break-up, but perhaps less conciliatory on the vexed issue of debt renegotiation.