Goldman Sachs note a number of changes to their interest rate views,
implying a new round of global monetary policy easing. "In addition to
expecting a further 150bp-200bps or rate cuts in China, we now expect
the Fed to cut rates by 100bps by the end of 2009 Q1. We also expect
the CB and Bank of England to join the party by cutting rates by 75bps
and 150bps respectively over the next 12 months (we expect the BoE to
cut rates by 25bp on Thursday). The risks are also skewed to looser
policy in Sweden, Norway and the other peripheral economies over the
next several months (although Denmark hiked 40bp yesterday, this was
more of a sign of their commitment to the fixed exchange rate.) Given
the current very fragile state of markets, we would not rule out some
form of coordinated easing amongst the major central banks in the near
future, including the Bank of Japan (which we now forecast will cut
25bp this quarter)", writes Binit Patel at Goldman Sachs.