Central Bank Watch – RBA, BoC, BoJ Rates; Federal Reserve Chair Powell Semi Annual Testimony

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    ECB policymaker Villeroy de Galhau said that it is desirable to reach the terminal rate by the summer and that growth in France is expected to be slightly positive in 2023.

    Bank of England Governor Bailey said that additional rate hikes may be appropriate, but nothing has been decided yet.


    Minneapolis Fed President Neel Kashkari (voting FOMC member) says he is leaning towards pushing up rate policy path; says recent month’s inflation data was concerning; says the debate over 25 or 50 is less important to him

    Atlanta Fed President Bostic (not a voting FOMC member) says that inflation is still too high and its not time to ease; says rates should go to 5.00-5.25% and hold – CNBC


    Goldman Sachs raise its estimate for ECB interest rate hikes for the 2nd time in 2 weeks

    Goldman Sachs had expected the European Central Bank to raise its rate by 25 bp in May but has revised this to +50bp in a research note.

    now forecast peak by the European Central Bank to 3.75% by June (was at 3.5%)
    Higher than expected Spanish and French inflation numbers
    Remarks from ECB chief economist Lane this week to the effect that rates will be held higher for longer


    Bank of Japan policymaker Takata repeated that ultra-loose policy must be maintained.

    Meanwhile, a JGB market survey conducted by the BoJ noted that the market is functioning at its worst level since the series began in 2015.


    Bank of England chief economist Pill:
    Some high-frequency indicators of wages have fallen quite sharply recently.
    GDP is projected to fall slightly over the coming quarters
    Survey indicators that have become available since the publication of the forecast have surprised to the upside, suggesting that the current momentum in economic activity may be slightly stronger than anticipated.
    CPI inflation is projected to fall to below the 2% target by the end of the forecast horizon
    GDP is expected to be close to zero in Q1
    The labor market is tighter than unemployment rate would suggest
    Unemployment is projected to be very low


    Atlanta Fed President Bostic
    Won’t decide until meeting on the proper path of policy
    Have seen ‘some attenuation’ on inflation but Fed needs to remain ‘resolute’ in fighting high prices
    Says he’s firmly in the 25 bps camp for rate hike pace and says policy should begin to bite in the spring
    Considers risks now roughly balanced
    Business contacts demand is strong and that concerns are more macro than on their business
    Fed does not “do more than we need to”
    Businesses say they are expecting to ratchet down the pace of wage hikes, but still plan to add workers
    Will need to have ‘some kind’ of slowdown in labor market but not ‘catastrophic’


    Fed’s Logan on market disfunction
    -Central bank interventions in Treasuries should be rare
    -Need to clarify terms of bond buying when done for market support
    -The Fed still hasn’t solved the problems that caused it to pledge to buy

    Helmholtz Watson

    Central bankers continued their hawkish tilt for the most part all week. Though Fed’s Bostic gave the stock and bond markets relief when he said he’s
    [See the full post at: Central Bank Watch – RBA, BoC, BoJ Rates; Federal Reserve Chair Powell Semi Annual Testimony]

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