Monetary Policy

• The European Central Bank (ECB) is examining the intersection of artificial intelligence and monetary policy to maintain price stability within the euro area. • A 2025 IMF working paper by Bogmans et al. highlights the significant energy demands of the AI industry, particularly in the United States. • Simulations from the report suggest that US electricity prices could rise by 8.6% by 2030 as a direct result of AI-driven power consumption.

• Voters in Johor will head to the polls on July 11, with Pakatan Harapan and Barisan Nasional competing across all 56 state constituencies to form the next state government. • The election is viewed as a critical test for the partners in the current federal government as they face off in a head-to-head battle for regional control. • Bank Negara Malaysia will announce its Overnight Policy Rate decision this Thursday following the Monetary Policy Committee meeting.

• The European Central Bank (ECB) is monitoring liquidity conditions and monetary policy operations for the period between 11 February and 5 May 2026. • An increasing number of banks are currently testing their participation viability to ensure operational readiness for these specific operations. • This trend is driven by the ongoing contraction of the Eurosystem's balance sheet, which necessitates that banks have reliable access to liquidity.

• The Federal Open Market Committee (FOMC) maintained the target federal funds interest rate in the 3.50%-3.75% range during its June 17 meeting. • This decision aligns with investor expectations as the Federal Reserve seeks to balance the containment of inflation with the need to support labor markets. • Fed policy is critical because it directly influences borrowing costs, savings returns, and general financial conditions across the U.S. economy.

• Indian stock market indices climbed in early trade on Friday, with the BSE Sensex rising 269.93 points to 74,629.94 and the NSE Nifty increasing by 62.4 points to 23,478.95. • The upward movement comes as investors position themselves ahead of the Reserve Bank of India's (RBI) upcoming monetary policy decision. • This activity reflects market anticipation regarding potential interest rate changes or policy shifts that could impact economic growth and liquidity.

• India's Reserve Bank of India began its 3-day monetary policy meeting on April 7th, with the decision scheduled for announcement on April 8th, affecting regional market sentiment. • A CNBC TV18 poll indicates market consensus expects no change to repo rates in the upcoming policy decision, suggesting the RBI will maintain its current monetary stance. • The policy meeting comes amid mixed signals from Indian corporate earnings, with HDFC Bank reporting business growth above expectations while Kotak Mahindra Bank fell short.