Central banks’ tone remains hawkish. In doing so, they want to prevent a rate cut from being misinterpreted as a downward shift in interest rates.
The last round of central bank meetings this year shocked stock markets. In fact, it turned out to be ambiguous. The Central banks in the United StatesIn the Euro-zonein Switzerland and in Great Britain On the one hand, key interest rates rose by only 0.5 percentage point, as expected by the markets. This means that each person has slowed their previous rate of narrowing.
This is an indication that the most painful phase of traction is over. Monetary authorities react to lower inflation (USA and Switzerland) or start to stabilize (eurozone and UK). This is the good news.
However, the stock exchanges on Thursday responded to the bad news that central banks were also prepared: Inflation will still be difficult to control in 2023. Interest rates will continue to rise. Interest rate cuts are not an issue.
Lower oil prices alone no longer brighten the inflation outlook for 2023. Even the oft-quoted statistical fundamental effect—stable energy prices enough to bring down inflation—was only mentioned in passing by central bankers. Instead, they stressed the second-round effects of more and more goods and services becoming more expensive.
But this is not real news. This week, central banks have tried above all to prevent markets from misinterpreting a slowdown as a shift in interest rates. Therefore, they would keep their tone restrained for the time being. Even at the risk of overdoing it.
Andreas Nienhaus He has been an editor at FuW since 1997 and writes on macro topics, particularly those related to interest rates, currencies, and economics. After studying management sciences at the University of Constance and obtaining his doctorate, he worked in the economic research department at Credit Suisse. Lives in Rome.More information