At the moment, it seems that the Fed is expected to start the easing cycle, at least in terms of rate cuts, before major European central banks such as the ECB and BoE.
At the start of this year, many analysts expected euro/dollar would trade up from its opening level of 1.06 to around 1.10 in mid-year and then on to 1.15 by the...
What is clearly far more uncertain is the level of the “new normal” for inflation and rates.
Momentum remains with the US dollar, and, while we do not see this as the long-term outlook, it is hard to argue against more strength in the short term.
G10 FX volatility remains low with implied one-month euro/dollar volatility below 7% right now, or around a half of the level that we were seeing a year ago.
The ECB seemed to send out a clear message last week that policy rates won’t rise again if the economy develops as the bank expects.
Are central banks starting an easing cycle well ahead of major central banks such as the Fed and ECB taking a risk with their currencies? The recent slump in the Polish...
It is rare to see an upcoming central bank gathering that sees the market as divided as Thursday’s ECB meeting.
ECB Chief Economist Lane said that the bank believes that 2023 will be the year of the peak second round to fight inflation. But is that correct, and which countries are...
It might not have been popular with Italian banks or global stocks, but the Italian government’s raid on bank profits might not be an isolated case of populist politics.
For some central banks, the interest rate cutting cycle has begun. But with the Fed widely seen to be some nine months to a year away from its first cut, does this mean...
Central banks are thought to be in the home stretch when it comes to policy tightening.
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.
There has not been a substantial tightening of credit conditions by banks in spite of the recent turmoil in the banking sector, particularly in the US.
The ECB is likely to be most concerned about persistent inflation. This could have consequences for how monetary policy is adjusted and the performance of asset prices...
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.
Not for the first time the ECB has hiked rates into what is clearly a very difficult financial situation. In the prior two instances the ECB’s actions were later seen as...
The question now is not just whether central banks like the ECB and Fed may pause rate hikes on the basis that they don’t want to inflame banking strains.
All G10 central banks are data dependent when they set policy and most emerging market central banks too.
There is a view that everybody loses from soaring inflation and hence picking out who has the most to lose has little meaning.
The last week’s Fed, ECB and BoE meetings have been notable for the slightly more dovish, or hopeful comments from bank leaders.
VN
EN