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Please find attached the December 2017 edition of the IGM Monthly Interest Rate Outlook.


Synchronised global economic growth is far from inducing synchronised global tightening, although the bias gathers steam. As IFI Senior Research Analyst Marcus Dewsnap writes, there is even a whiff of normalisation hints from the BoJ. A reason put forward in support of this thesis is the risk QE has in distorting the Japanese equity market � but there is evidence that is already occurring [pages 2-4].

  • Still, there's been no outright policy clue from the BoJ since it's last, October, policy meeting. Asia FX Analyst Jian Hui Tan notes that Governor Kuroda continues to insist that there's no need for further easing at this point, hence, it remains a case of not what the BoJ says, but what it does at its regular bond purchase operations which betray policy leanings. [Pages 5, 8].
  • No such veil at the Fed where a rate hike is fully priced for December, amidst yield curve flattening. Senior US Treasury Market Analyst John Kamerdin adds that as balance sheet reduction continues and the size is increased over the course of 2018, coinciding with increased Treasury issuance, the marketplace will enter uncharted waters. [Pages 5,7].
  • In Turkey, the monetary landscape has shifted sharply for the CBRT over the last month as an accelerated Lira sell-off has once again put pressure on the CB to tighten policy, preferably via conventional channels writes Emerging Market Managing Analyst Chris Shiells [Pages 6,13].
  • The BoK became the first CB in the Emerging Asia region to pull the trigger on rate hikes. The move was expected although the decision was not unanimous, but, as Emerging Market Analyst Freda Yeo points out, the CB is actively decoupling itself from the Feds hiking cycle. [Pages 6, 14-15].

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