Global policy rates:Changes to rates and HSBC forecasts

In the US, we still expect the Fed to raise the fed funds rate in December 2017 and March 2018 but then to keep on hold at 1.50-1.75% until atleast the end of 2019.

    We expect no rate rises from the ECB until Q1 2019 when we expect a 15bp rise in the deposit rate. We then expect a 25bp deposit rate andrepo rate rise in Q3 2019 to 0.00% and 0.25% respectively.

    Following the BoE’s September minutes, we now expect two 25bp rate rises in Q4 2017 and Q2 2018 in the UK. This will take the policy rate to0.75% where we expect it to remain on hold until at least the end of 2019.

    In Indonesia, the central bank cut its policy rate to 4.25%. We believe this was driven by below potential growth in H2 2017, a semi-structuraldecline in food inflation and sustained portfolio inflows. We now expect a cut in Q1 2018 taking the rate to 4.00% until at least the end of 2019.

    In Mexico, we expect inflation to start receding in 2018, economic activity to remain subdued and additional appreciation and stabilization of USD/MXN.

    We therefore now expect one 25bp rate cut per quarter, starting in Q3 2018 and continuing until the end of 2019 taking the policy rate to 5.50%.

    In Argentina, we expect the central bank not to lower its reference rate until Q2 2018 as inflation should moderate less than targeted. After thiswe expect cuts of varying magnitude until the end of 2019, taking the policy rate to 12.00%.