Central Bank Watch – Week Ahead Focus on RBA, RBNZ, RBI, Powell and US Jobs Report

Five central banks will deliver policy decisions in the week ahead with little impact seen locally or globally. The RBA, RBI, RBNZ all likely to hold. Peru’s and Poland’s central banks are expected to cut again. We have a plethora of Fed and ECB speakers including Powell and Lagarde. We have CPI from Chile, Colombia, Peru, Switzerland, Australia, Indonesia, Philippines, South Korea, Taiwan and Thailand. Focus will be on the jobs reports out of the US and Canada Friday.

In the past week we had a chat from Fed’s Powell and decisions from central banks in Hungary, Mexico, Colombia and Thailand. Focus was on Friday’s release of U.S. consumer spending, incomes and saving rates which included Fed favorite core PCE inflation, also we got Eurozone inflation with September’s CPI rate. The inflation data was all of a decelerating nature.

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.

In the Week Ahead

In the week ahead we have 4 central bank’s monetary policy meetings.

  • RBA Australia’s central bank is widely expected to stay on hold at a cash rate target of 4.1% again on Tuesday night (ET). Consensus is close to unanimous, and markets have nothing priced in for this decision. Since its last decision to stay on hold in early September, jobs jumped 65k higher but entirely due to part-time workers. CPI inflation increased to 5.2% y/y for the first up-tick since April, but mostly due to transportation and within that energy costs. Traditional core CPI ebbed to 5.5% while trimmed mean CPI was unchanged at 5.6%.
  • RBNZ No policy rate change is expected on Wednesday. New Zealand’s central bank is unanimously expected to hold again at a target rate of 5.5%. Since its hold on August 15th, growth has surprised higher, coming in at about 3½% q/q SAAR. That followed two weak quarters. More important are likely to be the next releases for Q3 wage growth at the end of the month, and Q3 CPI on October 16th as they could influence the next decision on November 28th and whether to adjust its forward guidance at the next meeting.
  • Poland The National Bank of Poland (NBP) meets Wednesday for the first time since delivering a shock 75-basis-point rate cut earlier this month and coming just before Oct. 15 parliamentary elections. A sharp decline in inflation since will provide further support for another rate cut, possibly between 25 and 50bps is the chatter.
  • Banco Central de Reserva del Peru Peru’s central bank is widely expected to cut its reference rate by 25bps on Thursday. This would be the second reduction following September’s cut that itself followed a holding pattern since the last hike of the cycle was delivered back in January. At its September meeting, the BCP said that its cut “would not necessarily imply a cycle of successive reductions in the interest rate”. Since then, a monthly indicator of economic activity that serves as a guide to GDP growth worsened in July to -1.3% y/y.
  • RBI India’s central bank is widely expected to stay on hold at a repurchase rate of 6.5% on Friday. Core inflation has continued to ebb to below 5% y/y. The central bank is likely to look through a recent spike in energy and vegetable prices.

Previews come from Scotiabank and other sources

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.

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:

  • Hungary. Hungary’s central bank fifth full-percentage point monthly cut to 13% on the one-day deposit facility, aligning it with the benchmark, which will revert to be the key rate. The bank reaffirmed a more hawkish tilt in monetary policy after completing the unwinding of an emergency interest rate hike that staved off a currency crisis last year. The forint rose against the euro. Hungary needs “tight” monetary policy and must be “cautious” with further rate cuts as inflation remains “unacceptably high” Deputy Governor Barnabas Virag said at an online briefing on Tuesday.
  • Mexico. As expected, Banxico left the rate unchanged at 11.25%. However, the central bank revised upward the inflation outlook, and maintained the hawkish signal to keep the rate on hold for a prolonged period. Since the previous policy meeting, a lot of domestic and external factors have changed the economic outlook for the coming year, including the strong possibility of interest rates at a restrictive level for a longer period.
  • Colombia The Board of Colombia’s central bank (BanRep) kept the policy rate at 13.25%. Five members voted for holding and two for a rate cut. In the communique, the board highlighted that despite the progress on the inflation front, there are still risks that are slowing the speed of inflation convergence towards the target.
  • Thailand. Thailand’s central bank unexpectedly raised its key interest rate for an eighth straight meeting on Wednesday. Key rate hiked by 25 bps to 2.50%, a 10-year high. Says key rate has reached ‘neutral’ level. Cuts 2023 GDP growth forecast to 2.8% from 3.6%. Raises 2024 GDP growth outlook to 4.4% from 3.8%. Sees upside inflation risk from government stimulus policies

Eyes on the Bond Market

De-risking and deleveraging gained momentum this week, much to do with margin covering. Global yields spike with notable pain for the European periphery. U.S. Treasuries saw fresh lows for the year this week but at least finished September on a higher note. Treasuries got support from the Personal Income (actual 0.4%; consensus 0.5%) and Personal Spending (actual 0.4%; consensus 0.5%) report for August missed expectations, showing some moderation in the yr/yr core PCE rate to 3.9% from 4.3% in July.

There is much uncertainty, a UAW strike, government shutdowns and margin deficiencies. Another underperformance in longer tenors expanded the 2s10s spread by 21 bps to -47 bps. For the month, the 2s10s spread expanded by 30 bps.

Yield Watch

Friday/Week/Month

  • 2-yr: -4 bps to 5.04% (-8 bps for the week; +18 bps for the month)
  • 3-yr: -4 bps to 4.79% (-4 bps for the week; +16 bps for the month)
  • 5-yr: -4 bps to 4.60% (+3 bps for the week; +36 bps for the month)
  • 10-yr: -2 bps to 4.57% (+13 bps for the week; +48 bps for the month)
  • 30-yr: -2 bps to 4.71% (+19 bps for the week; +51 bps for the month)

Highlights – Federal Reserve

  • Federal Reserve Credit declined $23.3bn last week to $7.980 TN.
  • Fed Credit was down $921bn from the June 22nd, 2022, peak.
  • Over the past 211 weeks, Fed Credit expanded $4.253 TN, or 114%.
  • Fed Credit inflated $5.169 TN, or 184%, over the past 568 weeks.
  • Fed holdings for foreign owners of Treasury, Agency Debt increased $2.0bn last week to $3.436 TN.
  • “Custody holdings” were up $70bn, or 2.1%, y-o-y.

Fed 2023 Bank Stress Tests.

Busy Central Bank Week Ahead:


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

Monday, October 2, 2023

  • 23:30 RBA Interest Rate Decision

Tuesday, October 3, 2023

  • 21:00 RBNZ Interest Rate Decision

Wednesday, October 4, 2023

  • 11:00 Poland Interest Rate Decision

Thursday, October 5, 2023

  • 19:00 Peru Interest Rate Decision

Friday, October 6, 2023

  • 00:30 RBI Interest Rate Decision

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

Monday, October 2, 2023

  • 03:00 ECB’s De Guindos Speaks
  • 11:00 BoE MPC Member Mann
  • 11:00 Fed Chair Powell Speaks
  • 11:00 FOMC Member Harker Speaks
  • 13:00 Fed Vice Chair for Supervision Barr Speaks
  • 13:30 FOMC Member Williams Speaks
  • 19:30 FOMC Member Mester Speaks
  • 23:30 RBA Interest Rate Decision

Tuesday, October 3, 2023

  • 02:10 ECB’s Lane Speaks
  • 08:00 FOMC Member Bostic Speaks
  • 20:30 RBA Chart Pack Release
  • 21:00 RBNZ Interest Rate Decision

Wednesday, October 4, 2023

  • 04:00 ECB President Lagarde Speaks
  • 07:40 EUR ECB’s De Guindos Speaks
  • 10:00 ECB’s Panetta Speaks
  • 10:25 FOMC Member Bowman Speaks
  • 10:30 Fed Goolsbee Speaks
  • 11:00 Poland Interest Rate Decision
  • 12:00 ECB President Lagarde Speaks

Thursday, October 5, 20232023

  • 05:45 BoE MPC Member Broadbent Speaks
  • 05:45 ECB’s Lane Speaks
  • 09:00 FOMC Member Mester Speaks
  • 09:00 German Buba President Nagel Speaks
  • 10:00 ECB’s De Guindos Speaks
  • 11:30 FOMC Member Barkin Speaks
  • 12:00 FOMC Member Daly Speaks
  • 12:15 Fed Vice Chair for Supervision Barr Speaks
  • 16:30 Fed’s Balance Sheet
  • 16:30 Reserve Balances with Federal Reserve Banks
  • 19:00 Peru Interest Rate Decision
  • 20:30 RBA Financial Stability Review

Friday, October 6, 2023, 2023

  • 00:30 RBI Interest Rate Decision
  • 11:00 Poland NBP Monetary Policy Meeting Minutes
  • 12:00 Fed Waller Speaks

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.


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