Inflation has come down in most G10 countries, but central banks have not caused it. This may seem controversial argument but it is not really.
There has been much made of the fact that sharp rate hikes from just about all G10 central banks have not led to the depth of economic slowdown that was feared.
Many central banks hold out hopes that they can both defeat inflation and avoid a recession, the Reserve Bank of New Zealand appears far more realistic about its chances.
Nobody said the rate hike pause would be easy, and this is certainly proving the case when it comes to a policy pause from G10 central banks.
The Fed has suggested that it has paused its rate hikes. It is not the first developed-country central bank to do so and others could be joining soon, such as ECB, BoE.
Many central banks have purchased gold for their reserves, which might boost the price of gold to a new high.
Central banks have been at pains to argue that the objectives of inflation control and financial stability do not conflict.
Many central banks are concerned about reducing inflation while maintaining financial stability.
Financial stability risks arising from banking stress make policy judgments far harder for central banks.
All G10 central banks are data dependent when they set policy and most emerging market central banks too.
There are reasons to fear that inflation won’t decline in the way that central banks expect.
The last week’s Fed, ECB and BoE meetings have been notable for the slightly more dovish, or hopeful comments from bank leaders.
In recent years, major central banks have decided that their methods for achieving their mandates left something to be desired. The Fed changed its modus operandi in...
Up until 2021, advanced-country central banks found it too easy to achieve their 2% inflation targets. Now they find it too hard. Instead, achieving a full employment...
The Fed, ECB, BOE and SNB all hiked 50-bps while Norges Bank announced a smaller 25-bps hike.
Last week, the BoE told the market that it is wrong to expect the base rate to rise in the way that’s factored into the implied money market curve.
Major central banks have accumulated huge amounts of assets via all the bond (and FX) purchases done over the years since the global financial crisis (GFC).
The 50-bps rate increase from the Bank of Canada reflected the second time it has reduced the size of its rate hikes. The Reserve Bank of Australia has also moved to a...
Just recently we’ve seen two instances of intervention: FX intervention by the Bank of Japan (BoJ) and Bank of England (BoE) intervention in the gilt market.
With inflation rising dramatically, the critics are out and, not surprisingly, central banks are in the firing line.
Central bankers continue to claim that inflation can be tamed without causing recessions.
Major central banks have two main avenues to tighten financial conditions: higher rates and quantitative tightening.
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