Jeroen Blokland’s Post

Last week, central banks responsible for setting policy on six of the ten most-traded currencies met to decide the path forward for nearly half of the global economy. This week, we review the busy week for monetary policy decisions and what it means for markets going forward. KEY TAKEAWAYS: - More than twenty central banks held policy decision meetings last week. - Bank of Japan puts an end to negative interest rate regime. - Federal Reserve keeps rates unchanged, pencils in three cuts for 2024. - Bank of England moves forward with a dovish pause. - Swiss National Bank becomes first major central bank to cut interest rates. Read More: https://lnkd.in/ePkmwiWV

Last week, central banks responsible for setting policy on six of the ten most-traded currencies met to decide the path forward for nearly half of the global economy. This week, we review the busy week for monetary policy decisions and what it means for markets going forward. KEY TAKEAWAYS: - More than twenty central banks held policy decision meetings last week. - Bank of Japan puts an end to negative interest rate regime. - Federal Reserve keeps rates unchanged, pencils in three cuts for 2024. - Bank of England moves forward with a dovish pause. - Swiss National Bank becomes first major central bank to cut interest rates. Read More: https://lnkd.in/ePkmwiWV

The Great Untangling: Central Banks Start Easing Policies at Different Speeds The era of unified, aggressive rate hikes is shifting into a slower, country-specific easing phase. Expect a bumpy journey, as rates will likely remain higher than the lows of the past 15 years. Policymakers are cautious! They are closely watching data, especially since inflation is still above target levels. The future is uncertain. Central banks, dealing with the complex global economy and persistent inflation, will avoid setting a fixed path for interest rate cuts. Common Ground: Leading central banks, like the Swiss National Bank, the Bank of Canada, and the European Central Bank, stress the importance of realistically assessing inflation, understanding its dynamics, and adopting a forward-looking approach to monetary policy. #MacroPrudence #CentralBankSpeak #Growth #Economy #GlobalEconomy

The leading central banks further tightened policy over the last couple of weeks, as discussed in this update from BlackRock. Even the Bank of Japan got in on the act, surprising market analysts. Apart from bringing down core inflation that's still judged to be too high, several central banks also face the challenge of shrinking their bloated balance sheets. The implication is that the much-anticipated easing of monetary policy is still many months away -- perhaps mid-2024 for the U.S., Europe and Canada.

The Swiss National Bank unexpectedly cut its key interest rate by 25 basis points, moving months ahead of global peers as policymakers try to prevent gains in the franc. Officials in Zurich lowered their benchmark to 1.5%, the first such reduction for one of the world’s 10 most-traded currencies since the pandemic ended. The Swiss currency is one of the worst-performers across Group-of-10 peers this year on speculation the SNB would be among the first central banks to start easing policy.

📊 Featured Events in our "Weekly Macro and Markets View" this week, where we highlight the greater moderation in the central banks of our region: - Brazil and Chile: The central banks of Brazil and Chile have further adjusted their forward guidance. In a context where expectations have adapted to a slower convergence of inflation than previously expected. - United Kingdom: Headline inflation in the United Kingdom has fallen again and is now in line with the Bank of England's target of 2%. Although the recent trend is reassuring, core inflation, and especially services inflation, remains too high. - Swiss National Bank (SNB): The SNB has applied a second rate cut. In addition, they have reduced inflation forecasts, which now stand at 1% for 2026. The strength of the Swiss franc and deflationary pressures have motivated this greater policy flexibility, and the SNB does not rule out similar future measures. We are attentive to economic news! What do you think about these movements by central banks? 🤔

The decision from the European Central Bank today will be a close call, but we’re anticipating a 25 basis points increase. Currently, money markets are factoring in a 65% implied probability of such a move, which suggests there is still room for the euro to strengthen if the central bank proceeds with the hike this afternoon. It's worth noting, however, that a full 25bps increase is already priced in by the end of the year. Therefore, President Christine Lagarde may face a challenging task in convincing the markets that the ECB can continue raising rates beyond this point — and any rally in the common currency following the announcement is expected to be short-lived.

New Post: Fed and other banks to make ‘major progress’ on rates this year, BIS chief says - https://lnkd.in/gXQbJhnE - The Federal Reserve and European Central Bank look poised to make "major progress" in cutting interest rates this year, says the central bank of central banks. - #news #business #world -------------------------------------------------- Download: Stupid Simple CMS - https://lnkd.in/g4y9XFgR -------------------------------------------------- or download at SourceForge - https://lnkd.in/gNqB7dnp

This week, the Bank of England indicated that it is more comfortable with cutting rates, while the European Central Bank is widely expected to begin its rate cutting cycle in June. Looking at the domestic picture, rates will likely be cut faster than in the US, although imported inflation due to currency weakness may give central banks pause for thought. Read more from Jeremy Sterngold, Deputy Chief Investment Officer, who discusses the recent interest rate changes from global central banks in #TheBrief: https://bit.ly/3QDQAdR

Expected central bank policy divergence remains surprisingly limited. After a broad-based hawkish reappraisal, rate expectations have largely moved in lockstep across major central banks this year, with investors now pricing in 3.4 rate cuts from the Fed by year end, 3.6 from the European Central Bank, 3.1 from the Bank of Canada, and 2.5 from the Bank of England. This dynamic has reduced volatility in currencies, but doesn’t seem likely to live to a ripe old age: at some point, differing economic trajectories should drive a bigger shift in expected policy responses: