Central Bank Watch – Deluge of BOE, ECB and Fed Speakers including Powell and Bernanke

Three central bank decisions are on the books in the coming week. Most significant is the PBoC’s 1-year Medium-Term Lending Facility Rate at the start of the week (Sunday 9:20pmET). Bankgo Sentral ng Pilipinas and Banco de México (Banxico) are expected to hold their overnight rates at unchanged. In the week ahead we have a deluge of Fed and ECB speakers on the docket highlighted by Federal Reserve Chair Powell and past Chair Bernanke participating Friday in a joint 45-minute panel titled ‘Perspectives on Monetary Policy’ at the Thomas Laubach Research Conference held in honor of the late economist’s contributions. Mentions of the natural rate of interest will be watched for.

The Bank of England, Poland, Peru and Chile all met on rates with expectations largely as expected last week. BOE governor, Andrew Bailey reiterated in his press conference the bank will adjust the bank rate as necessary to return inflation to target sustainably. The Federal Reserve released its twice–yearly report Monday on financial hazards in its 2023 financial stability report.

Central Bank Weekly Analysis and Outlook – Banker dynamics are complex. There are myriad facets to analyze and contemplate.

Central bank monetary policy decisions and market activity interest rate decisions can have a dominant effect on financial markets, fiscal policy and geopolitics. We keep an eye on key banker developments, what they mean and what is ahead.

To say central bankers, have issues is an understatement. Already grappling with the quickest inflation in decades they now have these decisions to make, forcefully raise borrowing costs to defend currencies and risk hurting growth, spend reserves that took years to build to intervene in foreign exchange markets, or simply stand aside and let the market play out.

In the Week Ahead

This week all eyes on the ECB and Fed officials’ speeches. We also have PBoC’s 1-year Medium-Term Lending Facility Rate at the start of the week (Sunday 9:20pmET). Bankgo Sentral ng Pilipinas and Banco de México (Banxico) are expected to hold their overnight rates at unchanged.

Central Bank Highlights This Past Week:

Most of the G10 central banks may complete their rate hike cycles around the middle of the year or earlier, the unwinding of central bank balance sheets may continue longer, depending on the damage done.

This week’s central bank main events included:

  • The Bank of England MPC at its May meeting Thursday raised the key bank rate by 25 bps from 4.25% to 4.50% as expected. It was the 12th consecutive rate hike and BoE’s benchmark rate puts the cost of borrowing at the highest level since late-2008.
  • The Federal Reserve released its twice–yearly report Monday on financial hazards in its 2023 financial stability report.
  • Poland: National Bank of Poland (NBP) left interest rates unchanged at 6.75%
  • Peru: BCRP holds key rate for fourth consecutive month at 7.75% on Thursday, in a decision widely expected by the market consensus.
  • Chile: BCCh held its interest rate steady for the fourth straight meeting at 11.25%, the highest level in more than two decades.

Eyes on the Bond Market

U.S. Treasuries ended the week lower, giving back their gains from earlier in the week. Friday’s retreat left yields on 10s and 30s little changed for the week while the 2-yr note underperformed. The 2-yr Treasury note yield rose seven basis points to 3.98% this week and the 10-yr note yield rose one basis point to 3.46%. The 2s10s spread compressed by six basis points to -52 bps. The U.S. Treasuries auction were all strong this week. A $21 billion 30-yr bond auction met solid demand and was rated an A which followed lower than expected CPI and PPI reports for April. We also saw a $35 bln 10-yr note sale which met solid demand just under a stellar and a $40 bln 3-yr note sale found stronger interest.

Yield Watch

Friday/Week/Month

  • 2-yr: +8 bps to 3.98% (+7 bps for the week)
  • 3-yr: +12 bps to 3.67% (+2 bps for the week)
  • 5-yr: +9 bps to 3.45% (+3 bps for the week)
  • 10-yr: +7 bps to 3.46% (+1 bp for the week)
  • 30-yr: +3 bps to 3.78% (+2 bps for the week)

Highlights – Federal Reserve

  • Federal Reserve Credit declined $43.0bn last week to $8.461 TN.
  • Fed Credit was down $440bn from the June 22nd peak.
  • Over the past 191 weeks, Fed Credit expanded $4.734 TN, or 127%.
  • Fed Credit inflated $5.650 TN, or 201%, over the past 548 weeks.
  • Fed holdings for foreign owners of Treasury, Agency Debt increased $8.7bn last week to a near eight-month high $3.382 TN.
  • “Custody holdings” were down $41bn, or 1.2%, y-o-y.

Fed 2023 Bank Stress Tests.

Update: This got more interesting with the three bank failures in a week. Silicon Valley Bank (SVB) was the largest failure since Washington Mutual’s September 2008 collapse. It was also the second largest in U.S. history.

SVB is the dominant financier for Silicon Valley startups. SVB ended 2022 with a $120 billion securities portfolio, the vast majority mortgage securities (MBS and CMOs). SVB’s spectacular collapse will have a major negative impact on its $74 billion loan portfolio.

Silvergate Capital Corp. plans to wind down operations and liquidate its bank after the crypto industry’s meltdown. Silvergate collapsed amid scrutiny from regulators and a criminal investigation by the Justice Department’s fraud unit into dealings with fallen crypto giants FTX and Alameda Research. Silvergate’s woes deepened as the bank sold off assets at a loss and shut its flagship payments network, which it called “the heart” of its group of services for crypto clients.


The Federal Reserve last month released the hypothetical scenarios for its annual bank stress tests. This year, 23 banks will be tested against a severe global recession with heightened stress in both commercial and residential real estate markets, as well as in corporate debt markets. Last year the Fed found all 34 large banks tested remained well above their risk-based minimum capital requirements, and the Fed announced no restrictions relating to dividends and buybacks.

Central Bank Week Ahead:

This Week’s Interest Rate Announcements (Time E.T.)

In the week ahead we get 3 central banks delivering policy decisions.

Sunday, May 14, 2023

  • 21:20 PBoC’s 1-year Medium-Term Lending Facility Rate

Thursday, May 18, 2023

  • 03:00 Philippines Interest Rate Decision
  • 15:00 Mexico Interest Rate Decision

This Week’s Central Bank Speeches, Meetings (Time E.T.)

Monday, May 15, 2023

  • 07:30 Federal Reserve Bank of Atlanta President Raphael Bostic appears in live interview on CNBC, 0730 EDT/1130 GMT.
  • 08:10 German Buba President Nagel Speaks
  • 08:45 Federal Reserve Bank of Atlanta President Raphael Bostic gives welcome remarks before the Federal Reserve Bank of Atlanta 2023 Financial Markets Conference, 0845 EDT/1245 GMT. Livestream at https://www.youtube.com/watch?v=k2DJW1lbP1A.
  • 09:15 Federal Reserve Bank of Minneapolis President Neel Kashkari participates in fireside chat before the ACEC Minnesota Transportation Conference & Expo, 0815 CDT/0915 EDT/1315 GMT. No media Q&A. Audience Q&A expected. Livestream at minneapolisfed.org/live.
  • 10:00 BoC Financial System Review, survey based on “expert opinions on the risks to and resilience” of the country’s financial system
  • 12:00 BoE MPC Member Pill Speaks
  • 12:30 Federal Reserve Bank of Richmond President Thomas Barkin moderates luncheon keynote before the Federal Reserve Bank of Atlanta 2023 Financial Markets Conference, 1230 EDT/1630 GMT. Livestream at https://www.youtube.com/watch?v=k2DJW1lbP1A.
  • 17:00 Federal Reserve Board Governor Lisa Cook gives commencement address before the U.C. Berkeley Spring 2023 Economics Commencement, 1400 PDT/1700 EDT/2100 GMT. Text available. No Q&A. Webcast at https://www.youtube.com/watch?v=44OS61C5ajQ.
  • 21:30 RBA Meeting Minutes

Tuesday, May 16, 2023

  • 08:15 Federal Reserve Bank of Cleveland President Loretta Mester speaks in person before the Global Interdependence Center “Central Banking Series: Dublin” event, 0815 EDT/1215 GMT (1315 local). No livestream. Cleveland Fed will post transcript of speech, Q&A on its Web site.
  • 08:55 Federal Reserve Bank of Atlanta President Raphael Bostic gives “Welcome Back” remarks before the Federal Reserve Bank of Atlanta 2023 Financial Markets Conference, 0855 EDT/1255 GMT. Livestream at https://www.youtube.com/watch?v=k2DJW1lbP1A.
  • 09:45 ECB’s Anneli Tuominen Speech followed by a conversation with Single Resolution Board Chair, Dominique Laboureix, at 18th IESE Banking Industry Meeting “Banking Navigating the Wave of Inflation” in Madrid
  • 10:00 Federal Reserve Vice Chair for Supervision Michael Barr testifies before the House Financial Services Committee Seminannual Hearing on Supervision and Regulation, 1000 EDT/1400 GMT. Text available. 2128 Rayburn. Livestream at https://financialservices.house.gov/ ***FERNANDINA BEACH, Fla.
  • 10:00 ECB President Lagarde Speaks at Laudation upon conferral of the State Prize of North Rhine-Westphalia to Angela Merkel in Cologne
  • 10:30 Federal Reserve Bank of Richmond President Thomas Barkin appears in live interview on Bloomberg TV, 1030 EDT/1430 GMT.
  • 12:15 Federal Reserve Bank of New York President John Williams participates in conversation organized by the University of the Virgin Islands, 1215 EDT/1615 GMT. No text. Moderated Q&A expected.
  • 15:15 Federal Reserve Bank of Dallas President Lorrie Logan moderates “Policy Session 4: Mitigating Risks and Preserving Financial Stability in an Appropriately Restrictive Policy Environment” before the Federal Reserve Bank of Atlanta 2023 Financial Markets Conference, 1515 EDT/1915 GMT. Livestream at https://www.youtube.com/watch?v=k2DJW1lbP1A. No text. Audience Q&A expected.
  • 19:00 Federal Reserve Bank of Atlanta President Raphael Bostic and Federal Reserve Bank of Chicago President Austan Goolsbee participate in Economic Outlook and Monetary Policy panel before the Federal Reserve Bank of Atlanta 2023 Financial Markets Conference, 1900 EDT/2300 GMT. (Goolsbee: moderated Q&A expected, no media scrum, no embargoed text. Bostic: audience Q&A expected, no media Q&A, no embargoed text). Livestream at https://www.youtube.com/watch?v=k2DJW1lbP1A.

Wednesday, May 17, 2023

  • 05:50 BoE Gov Bailey delivers a keynote speech at the British Chamber of Commerce annual conference
  • 11:15 ECB’s de Guindos delivers the closing speech at the 18th IESE banking industry meeting 18th “Banking Navigating the Wave of Inflation” in Madrid

Thursday, May 18, 2023

  • 00:30 ECB’s de Guindos remarks at seminar organised by PwC in Madrid
  • 03:00 ECB President Lagarde at official celebration of the 175th anniversary of the first German national parliamentary assembly event in Paulskirche in Frankfurt
  • 09:15 Federal Reserve Board Governor Philip Jefferson speaks on the economic outlook before the National Association of Insurance Commissioners (NAIC) International Insurance Forum, 0905 EDT/1305 GMT. Text available. No Q&A. Webcast at https://www.youtube.com/user/NAICCommunications.
  • 09:30 Federal Reserve Vice Chair for Supervision Michael Barr testifies before the Senate Banking, Housing and Urban Affairs Committee Seminannual Hearing on Supervision and Regulation, 0930 EDT/1330 GMT. Text available. G-50 Dirksen. Livestream at https://www.banking.senate.gov/
  • 10:00 Federal Reserve Bank of Dallas President Lorrie Logan speaks before the Texas Bankers Association 138th Annual Convention, 0900 CDT/1000 EDT/1400 GMT. No livestream. Text available. No Q&A.
  • 10:00 BoC Financial System Review “a detailed analysis of developments in the financial system.”
  • 15:00 Mexico Interest Rate Decision
  • 16:30 Fed’s Balance Sheet
  • 16:30 Reserve Balances with Federal Reserve Banks

Friday, May 19, 2023

  • 05:45 MPC Member Haskel Speaks
  • 08:45 Federal Reserve Bank of New York President John Wiliams speaks before the Thomas Laubach Research Conference organized by the Federal Reserve Board of Governors, 0845 EDT/1245 GMT. Text and audience Q&A expected.
  • 08:55 ECB’s Isabel Schnabel at Conference on Financial Stability and Monetary Policy
  • 09:00 Federal Reserve Board Governor Michelle Bowman speaks participates in discussion before the Texas Bankers Association 138th Annual Convention, 0800 CDT/0900 EDT/1300 GMT. Text available. Q&A from moderator.
  • 10:00 ECB’s Isabel Schnabel on policy panel at Conference on Financial Stability and Monetary Policy in the honor of Charles Goodhart
  • 11:00 Federal Reserve Chair Powell participates in “Perspectives on Monetary Policy” panel before the Thomas Laubach Research Conference hosted by the Federal Reserve, 1100 EDT/1500 GMT. No text. Q&A from moderator. Webcast at www.federalreserve.gov.
  • 15:00 ECB President Lagarde and Hernandez participate in a panel at Brazil’s central bank conference. Pre-recorded video by Ms Lagarde at Session 2 “Post-pandemic challenges: High inflation, high indebtedness and financial stability” of Banco Central do Brasil’s High-Level Seminar on Central Banking “Past and present challenges” in São Paulo, Brazil

Federal Reserve FOMC Schedule 2023


The Fed with a Strong US Dollar

The strong dollar is likely to negatively affect the US economic outlook and could alter the Federal Reserve terminal interest rate, economists surveyed by Bloomberg said. Just 28% saw the currency strength as unlikely to have any impact.

The survey of 40 economists was conducted Oct. 21-26.

  • 44% said they believed the Fed could fully complete its aggressive rate tightening despite possible stresses.
  • 38% said the policy makers would be forced to cut rates earlier than expected and
  • 18% said the Fed would not be able to raise rates as much as planned.
  • Survey respondents expect rates to peak at 5% early next year and a majority of the economists now expect a US and global recession.

The Fed as expected raised another 50 basis-points last meeting. The median estimate for the terminal rate in 2023 had been raised to 5.10% versus the September projection of 4.60%. The value of the dollar is an important component to lowering inflation. A stronger dollar tends to dampen inflation by reducing the costs of imports and lowering domestic production as it raises export prices.

“Usually the trade deficit would balloon when the dollar appreciated as much as we had seen since last year. But that effect has been curiously absent so far, even as we are already about five quarters into the appreciation process. One possible explanation is that US is increasing its exports in energy products. The fact that this tightening channel of dollar is absent means that the dollar appreciation is less contractionary to the economy than historically.”

Anna Wong (Bloomberg chief US economist)

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