Central Bank Watch – Week Ahead Focus on U.S. and Eurozone inflation

In the past week we had the Fed’s FOMC, Bank of England, Bank of Japan, PBOC, Norges Bank, Riksbank, Swiss National Bank, Banco Central do Brasil, Central Bank of China Taiwan, Hong Kong, Bangko Sentral ng Pilipinas, Bank Indonesia, Turkey’s Central Bank and South African Reserve Bank. Further to that a slew of global macro readings. The end result was the higher for longer tone sent bonds and stock markets lower.

With the big dogs out of the way we get a chat from Fed’s Powell and decisions this week from central banks in Hungary, Mexico, Colombia and Thailand. Focus will be on Friday’s release of U.S. consumer spending, incomes and saving rates which includes Fed favorite core PCE inflation, also we get Eurozone inflation with September’s CPI rate.

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.

  • Hungary’s central bank latest communication left no doubt the effective rate will be lowered to 13% on Tuesday. They bank made it clear at its August rate-setting meeting and in the following communication
  • The Bank of Thailand may hike its policy rate by 25bps to 2.5% on Wednesday. That would extend the tightening cycle that began about a year ago and that has taken the policy rate up by about 175bps so far.
  • Banxico is expected to leave its overnight rate unchanged at 11.25% again on Thursday. GDP growth has been running at a solid pace for seven consecutive quarters averaging at about 1% q/q SA nonannualized and with only modest variations from quarter to quarter.
  • Colombia’s central bank is expected to hold its overnight rate unchanged at 13.25% on Friday. That would extend a pause dating back to April after a protracted hiking campaign that began in October 2021.

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:

  • The Bank of Japan as widely expected kept unchanged its -0.1% target for short-term interest rates, and 0% for the 10-year government bond yield unanimously.
  • The Bank of England MPC at its September meeting Thursday keeping the key bank rate at 5.25% which was unexpected by many despite recent lower inflation in the UK.
  • The Central Bank of Turkey hiked by 500bps to 30% at its September meeting. It has been raised by 22.5% since May. The lira was weaker in response and has been selling off throughout the hiking campaign.
  • The Swiss National Bank kept its policy rate at 1.75% in its September meeting, it came as a surprise to the markets who had expected on more raise.
  • Norway’s central bank, the Norges Bank’s Monetary Policy and Financial Stability Committee unanimously raised the policy benchmark interest rate by Norges Bank hiked 25bps to 4.25% and guided that another hike was likely in December
  • Sweden’s Central Bank, Riksbank on Thursday Sweden’s Riksbank hiked 25bps to 4% as expected, it also announced it was selling a quarter of reserves and guided the possibility of one more hike.
  • Taiwan’s central bank, Central Bank of the Republic of China (Taiwan) unanimously held the policy benchmark discount rate at 1.875% during its September 2023 meeting.
  • The Federal Reserve kept rates unchanged in a target range of 5.25-5.50% in unanimous vote at their September FOMC and updated economic projections.

Eyes on the Bond Market

A busy week for bond traders after a tidal wave of global central bank monetary policy decisions headlined by the Fed’s FOMC, Bank of England, Norges Bank, and the Swiss National Bank together with a slew of global macro readings. U.S. Treasuries ended Friday with gains across the curve, reclaiming some of their losses after the FOMC reinforced the higher for longer mantra. 10-year Treasury bonds hit 4.48%, a new 15 year high intraweek. 30-Year conventional mortgage at 7.49% a new 23 year high intraweek. Credit spread 1.72%, down -.04% w/w (1.72-2.42) (new 1 year low).

Yield Watch


  • 2-yr: -2 bps to 5.12% (+8 bps for the week)
  • 3-yr: -3 bps to 4.83% (+13 bps for the week)
  • 5-yr: -5 bps to 4.57% (+12 bps for the week)
  • 10-yr: -4 bps to 4.44% (+12 bps for the week)
  • 30-yr: -3 bps to 4.52% (+11 bps for the week)

Highlights – Federal Reserve

  • Federal Reserve Credit dropped $59.2bn last week to $8.003 TN.
  • Fed Credit was down $898bn from the June 22nd, 2022, peak.
  • Over the past 210 weeks, Fed Credit expanded $4.276 TN, or 115%.
  • Fed Credit inflated $5.192 TN, or 185%, over the past 567 weeks.
  • Fed holdings for foreign owners of Treasury, Agency Debt declined $0.45bn last week to $3.434 TN.
  • “Custody holdings” were up $49.6bn, or 1.5%, y-o-y.

Fed 2023 Bank Stress Tests.

Busy Central Bank Week Ahead:

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

Monday, September 25, 2023

  • None Seen

Tuesday, September 26, 2023

  • 08:00 Hungary Interest Rate Decision

Wednesday, September 27, 2023

  • 03:00 Thailand Interest Rate Decision

Thursday, September 28, 2023

  • 15:00 Mexico Interest Rate Decision

Friday, September 29, 2023

  • 14:00 Columbia Interest Rate Decision

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

Monday, September 25, 2023

  • 00:00 RBA Assistant Governor Jones Speaks
  • 09:00 ECB President Lagarde Speaks
  • 09:00 ECB’s Schnabel Speaks
  • 18:00 FOMC Member Kashkari Speaks
  • 21:00 BOK Financial Stability Board Meeting Minutes

Tuesday, September 26, 2023

  • 07:00 BCB Copom Meeting Minutes
  • 08:00 Hungary Interest Rate Decision
  • 08:55 German Buba Wuermeling Speaks
  • 13:00 German Buba Wuermeling Speaks
  • 13:30 FOMC Member Bowman Speaks

Wednesday, September 27, 2023

  • 03:00 Thailand Interest Rate Decision
  • 08:00 ECB’s Enria Speaks
  • 09:00 SNB Quarterly Bulletin
  • 12:45 SNB Chairman Thomas Jordan speaks

Thursday, September 28, 2023

  • 03:00 ECB’s Enria Speaks
  • 03:45 ECB McCaul Speaks
  • 04:00 ECB Economic Bulletin
  • 04:00 SARB Quarterly Bulletin
  • 08:00 BCB Inflation Report
  • 15:00 Mexico Interest Rate Decision
  • 16:00 Fed Chair Powell Speaks
  • 16:30 Fed’s Balance Sheet
  • 16:30 Reserve Balances with Federal Reserve Banks

Friday, September 29, 2023

  • 03:40 ECB President Lagarde Speaks
  • 07:30 RBI Monetary and Credit Information Review
  • 12:00 ECB President Lagarde Speaks
  • 12:45 FOMC Member Williams Speaks
  • 14:00 Columbia Interest Rate Decision

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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