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IFI_Monthly_Interest_Rate_Outlook_-_March_2018.pdf

Please find attached the March 2018 edition of the IGM Monthly Interest Rate Outlook.

Highlights: Signs of faster rate hike expectations are emerging in some jurisdictions. Might this be to do with the end of a structural disinflation force? In this context, Senior Editor Marcus Dewsnap and Chief European Technical Analyst Ed Blake highlight the potential for agricultural prices to become an inflationary issue [Pages 2-4].

  • Senior Editor Marcus Dewsnap is leaning towards 4-hikes from the Federal Reserve this year [Page 5,7].
  • European Fixed Income Manager Alvin Baker writes of the ECB, 'The most recent 'loose' guidance (February 26) should become obsolete as soon as the March 8 meeting' and expects the Dep Rate to be at 0% within 12-months [Pages 5,7-8].
  • 'It has become more doubtful that the RBNZ will even hike this year', Market Reporter Tian Yong Woon thinks, 'given how key economic metrics like wage growth and inflation failed to exhibit signs of materially breaking away from previous years of tepid showings despite some headway made in 2017' [Pages 5, 11].
  • Emerging Markets Analyst Robert Graystone suggests the Russian Central Bank will cut faster. 'The Bank's monthly report highlighted a reduction in short-term upside risks to inflation, opening the door for the CBR to take a more aggressive stance on rate cuts if conditions allow.' [Pages 6, 13].
  • Meanwhile, Emerging Asia Reporter Freda Yeo writes that with India expected to become the top regional economic performer in 2018, even famous dove Subramanian of the CEA admits that the time for a rate cut has passed, especially with oil prices rising and growth expected to fuel demand inflation [Pages 6, 14].

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