Link Securities | The Bank of England’s (BoE) Monetary Policy Committee approved by five votes to four a quarter-point cut in its benchmark interest rate to 3.75%, the first cut since last August. The four members who voted against the move argued for keeping rates unchanged. On this occasion, BoE Governor Andrew Bailey supported the decision to cut rates. The BoE’s benchmark rate is now at its lowest level since…
Norbolsa | New statements from Fed members suggest that the prevailing position is to lower interest rates again in October, despite some members advocating caution due to uncertainty about inflation. From New York, Governor John Williams said he would be comfortable lowering interest rates again, considering that the downside risk to employment is dominant and may have slowed further, while the pressure of tariffs on prices is not as high…
Bankinter: China is to adopt a “moderately loose/lax ’ monetary policy in 2025 to support economic growth. This is the first strategic shift in monetary policy since 2010 towards a ‘prudent’ monetary policy. In addition, the Politburo announces the implementation of more proactive fiscal policies, in order to ‘vigorously’ boost consumption and expand domestic demand in ‘all directions’. Opinion of Bankinter’s analysis team: The Chinese government has five fixed monetary…
Norbolsa: EU fiscal plan: The European Commission reported that France’s 2025 draft budget and medium-term plan to reduce public debt are in line with EU rules (it is projected to have a budget deficit of 6.1% of GDP this year and by 2025 aims to reduce it to 4% and then bring it below the EU limit of 3% in 2029), while the Netherlands’ spending plans are high. The European…
Benoit Anne (MFS Investment Management) | Last week, we witnessed some rather unusual activity among major central banks. Indeed, one central bank—the Swiss National Bank—delivered a rate cut, while another—the Bank of Japan—announced a rate hike. Sightings of unsynchronized monetary policy actions at the major central bank level are less frequent than sightings of UFOs in New Mexico. Not only that, but we are starting to get the sense of…
According to data from the European Central Bank (ECB), the monetary aggregate M3 in the Eurozone grew by 1.9% year-on-year in April (+2.5% in March) to €16.03 trillion. The reading, which was the lowest since July 2014, was slightly below the 2.0% growth rate expected by FactSet consensus analysts. The ECB also published that bank lending to eurozone households rose by 2.5% year-on-year in April to €6.87 trillion, marking the…
Annalisa Piazza (MFS Investment Management) | The ECB hiked policy rates by 50bp and pre-committed to hike by another 50bp in March. The depo rate now stands at 2.50%. Looking ahead, the ECB is widely committed to keep rates in restrictive territory to reach the inflation target in the medium term. The overall communication by the ECB remains relatively hawkish as the policy stance remains restrictive. That said, the market…
Link Securities | European Central Bank (ECB) President Christine Lagarde said on Friday that “staying the course” is her mantra on monetary policy and urged central banks around the world to do the same to achieve output recovery. Lagarde described 2022 as “a strange, strange year” as the low growth figures seen in the world’s largest economies were “not usual”. However, she expressed hope that “cooperatives, consumers, and state policymakers…
Alicia García Herrero (Natixis) | Financial markets were caught off guard when the Bank of Japan (BoJ) adjusted its monetary policy on December 20th, 2022. The Bank decided to lift the ceiling on the 10-year JGB yield to 0.5% from 0.25% under the yield control (YCC). One interesting point to make is that the BoJ did not take the decision against the wall. In fact, the upward pressure on the…
Juan Pedro Marín-Arrese | The Fed is running out of munition after raising its rates substantially. The narrowing margin forces it to slow down monetary tightening. Keeping unabated its previous speed would wreak havoc on the economy. Yet, Jay Powell countered any hope of further softening by delivering a relentless hawkish message at the latest press meeting that plunged stocks into utter disarray. Powell made it crystal clear at Jackon…