Central Banks

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The Reserve Bank of Australia held interest rates at an all time low on Tuesday to just 0.1% as widely expected despite lockdowns. The RBA noted that in the past once virus outbreaks are contained, the economy bounces back quickly. No change to QE tapering stance, to purchase bonds at A$5 billion per week until early September.

The Federal Reserve kept rates unchanged at their July meeting, kept QE infinity open with TALF for open-ended Treasuries, MBS and corporate bonds in amounts needed. Inflation has risen, largely reflecting transitory factors

ECB left rates unchanged as expected in July. The bank left deposit facility interest rates at -.50% and held steady rates on the main refinancing operations and on the marginal lending facility unchanged. PEPP purchases over the current quarter to continue to be significantly higher. Reaffirms size of PEPP program at €1.85 trillion.

Banco Central do Brasil​ hiked its benchmark interest rate by 75bp to 4.25% as expected. The Brazilian central bank indicated it may repeat the action next meeting. Earlier in the day the US Federal Reserve left rates unchanged.

The Federal Reserve kept rates unchanged at their June meeting, kept QE infinity open with TALF for open-ended Treasuries, MBS and corporate bonds in amounts needed. The big change is in the dot plot median for the end of 2023 now at 0.6% from 0.1% back in March.

ECB left rates unchanged as expected in June. The bank left deposit facility interest rates at -.50% and held steady rates on the main refinancing operations and on the marginal lending facility unchanged. PEPP purchases over the current quarter to continue to be significantly higher. Reaffirms size of PEPP program at €1.85 trillion.

The Bank of Canada left the key lending rate at 0.25 percent on Wednesday as expected. BoC repeated it will hold interest rate at the effective lower bound until economic slack is absorbed. Bank of Canada kept bond purchases to C$3 billion a week with its projection for full recovery to second half of 2022.

The Reserve Bank of Australia held interest rates at an all time low in May to just 0.1% as widely expected. In the RBA minutes released Tuesday the central bank repeated policy to remain very easy for some time and remains committed to maintaining highly supportive monetary conditions until its goals are achieved.

The Swiss National Bank announced they are to test a transfer of central bank digital currency funds. "We will try some cross-border functionality." "There will be another central bank and another currency other than the Swiss franc. " said Thomas Moser of the SNB's governing board. The test follows the researxh paper "How to Issue a Central Bank Digital Currency"

The Federal Reserve kept rates unchanged at their April meeting, kept QE infinity open with TALF for open-ended Treasuries, MBS and corporate bonds in amounts needed. Fed will continue to buy paper at current pace of $120B/month of Treasuries and MBS combined. Compare that to $40B/month in QE3.

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