The IMF has warned central banks not to rush to follow the Fed's lead in considering a policy pivot.
The Fed has signaled that inflation is improving faster than expected and has opened the door to a rate cut next year.
The European Central Bank (ECB) kept its three key interest rates unchanged.
The Bank of England kept its benchmark interest rate at 525% unchanged.
The SNB kept its policy rate at 175% unchanged.
Norges Bank unexpectedly raised interest rates by 25 basis points to 45%
Argentina's central bank kept interest rates at 133%.
Brazil's central bank cut its benchmark interest rate to 1175%
The Central Bank of Russia raised its benchmark interest rate by 100 basis points to 16%.
Bank of Japan**: There is no need to rush to remove the negative interest rate policy this month.
[Global Central Bank Dynamics].
International Monetary Fund (IMF) Managing Director Georgieva said that even if the Fed signals a policy pivot next year, other central banks around the world are not in a hurry to ease their efforts to fight inflation. The Fed is right to signal a turn based on US data, but other central banks should consider their own circumstances. Inflation is now falling, but the situation is different from country to country, and central banks will have to adjust their actions according to their domestic conditions. However, she mentioned that the battle against inflation has entered the "last mile".
The Federal Reserve kept interest rates unchanged at its third consecutive policy meeting and signaled that inflation was improving faster than expected, opening the door to rate cuts next year. The dot plot shows that most** expect three rate cuts in 2024. The Federal Reserve raised its forecast for US GDP growth in 2023 to 26%, and the increase is expected to be 2 in September1%；The US GDP growth forecast for 2024 was lowered to 14%, an increase of 1 in September5%；Maintain the US GDP growth forecast for 2025 at 18%, an increase of 1 in September8%；The US GDP growth forecast for 2026 was raised to 19%, and it is expected to increase by 1 in September8%；Maintain the long-term U.S. GDP growth forecast of 18%。
List of Fed Speeches:
Fed Chair Jerome Powell said that although the Fed does not rule out the possibility of further rate hikes at an appropriate time, it believes that interest rates may have reached or are close to peaking. At the same time, the Fed is thinking about when it is appropriate to cut interest ratesRate cuts are starting to come into view. There is no basis for believing that the economy is in recession;There is always the possibility of a recession next year;Believe that it is possible for the economy to avoid a recession. No one has declared victory in the fight against inflation, and that's still early;The next question is when to withdraw the policy.
Fed member Williams said that there is no real discussion about cutting interest rates at the moment, focusing on whether the interest rate policy is in the right position, and not speculating on the direction of interest rates. The economy and inflation remain highly uncertain, and the Fed must be prepared to raise interest rates again if needed.
Atlanta Fed President Bostic has said that a rate cut is not imminent, but staff have been instructed to begin working on possible principles and thresholds to guide the rate cut process. Two 25bp rate cuts are expected in 2024, with the first coming "sometime" in Q3, provided that progress in inflation expectations continues.
Chicago Fed President Goolsbee said he did not rule out a rate cut at its March meeting next year. If the data is supportive, it will support a rate hike, but if inflation continues on its current path, a rate cut may be appropriate. Interest rates are expected to be lower than they are now next year, but not significantly.
New York Fed data showed that the median U.S. consumer expectations for inflation in the year ahead fell for the second straight month in November, from 36% to 34%, the lowest level since April 2021.
The ECB kept the main refinancing rate, the deposit facility rate, and the marginal lending rate at 4%.75% unchanged, in line with market expectations. The ECB intends to stop reinvesting under the emergency anti-epidemic bond purchase program by the end of 2024. The ECB expects GDP growth of 06% and an inflation rate of 54%；GDP growth in 2024 will be 08% and an inflation rate of 27%。
ECB** Speech List:
ECB President Christine Lagarde said that market interest rates have fallen significantly below the level of interest rates among staff**;Determined to bring inflation back down to 2% in a timely manner;Everyone expressed their support for stopping the reinvestment of the Emergency Pandemic Purchase ProgramThere is no talk of a rate cut at all, the path of the rate will be determined based on the data;There is a plateau between rate hikes and rate cuts.
ECB Governing Council member Villeroy said that the ECB will return inflation to 2% by 2025, and barring unforeseen circumstances, the current cycle of interest rate hikes is over, and there is no timetable for rate cuts.
ECB Governing Council member Muller said it was too early to talk about a near-term rate cut.
The Bank of England kept its benchmark interest rate at 525% unchanged, in line with market expectations. The Bank of England said monetary policy may need to remain restrictive for an extended period of time. If there is evidence of persistent inflationary pressures, further tightening of monetary policy is needed.
The SNB kept its policy rate at 175% unchanged, in line with market expectations. In its statement, the SNB removed language about possible future rate hikes and removed language that FX was focused on selling. The SNB said it will no longer focus on foreign exchange and will adjust policy to control inflation and achieve the stability target.
Norges Bank unexpectedly raised interest rates by 25 basis points to 45%, the market expects to keep interest rates unchanged. Norges Bank expects the key interest rate to be 452%, and 455%；GDP growth in 2023 will be 10%, with a growth rate of 0 in 20241%。
Brazil's central bank will raise the bank's benchmark interest rate from 1225% to 1175%, the fourth time since August this year that the central bank of Brazil has lowered its benchmark interest rate.
Argentina's central bank kept interest rates at 133%.Argentina's central bank has enacted new foreign exchange rules aimed at regulating import flows and eliminating red tape for the use of hard currency to pay for international** transactions. Argentina's central bank said it would be wise to proceed with the process of normalization of foreign exchange in a gradual and orderly manner, given the low level of international reserves.
Russia's central bank raised its benchmark interest rate by 100 basis points to 16%, in line with market expectations. The head of the Central Bank of Russia, Nabiullina, said that the end of the rate hike cycle is near. The Central Bank of Russia expects Russia's GDP growth to exceed 3% in 2023, higher than in October**The CPI rose by nearly 7%-75% upper limit.
The Bank of Japan's quarterly Tankan survey showed a broad-based recovery in confidence, with the small manufacturing business index rising to 1, turning positive for the first time since early 2019. The Bank of Japan** believes that there is no need to rush to remove the last negative interest rate policy globally this month, as they have yet to see enough evidence of wage growth to support sustainable inflation.
The Bank of France said it expects GDP to grow by 01% (November 8 is expected to be between 01%-0.2%), which will be supported by the performance of the services sector;It has shrunk by 01%。
The Bundesbank expects Germany's GDP to shrink by 01%, with an increase of 04%, an increase of 12%；Germany's inflation rate in 2023 is 61% and 2 in 20247% and 2 in 20255%。
Turkey's central bank governor said that inflation is expected to remain in the single digits in 2026, and Turkey wants foreign investors to invest in ** bonds.
Mexico's central bank maintained its overnight interest rate at 1125% unchanged, in line with expectations.
The Bangko Sentral ng Pilipinas (BSP) key interest rate remained unchanged at 65%, in line with expectations.
The Central Bank of Peru cut interest rates to 675%, a new low in the last 11 months.
Qatar's central bank kept its interest rate policy unchanged.
The Central Bank of Moldova kept the key interest rate at 475% unchanged, in line with expectations.
Tunisia's central bank left its key interest rate unchanged at 8%.
[Market Watch].
After the Fed's remarks, Wall Street brokerages advanced their expectations for the timing of the Fed's first rate cut, and Goldman Sachs expects the Fed to start its rate cut cycle in March. JPMorgan Chase & Co. expects the first rate cut in June, compared to July, and the benchmark rate is expected to be cut by 125 basis points by the end of 2024. Barclays is also expected to cut rates for the first time in June next year, followed by two more cuts, every other meeting. Their previous rate cut was only once in December 2024. Barclays believes that if the monthly inflation data continues to be lower than expected, the rate cut could be earlier than expected in June. BlackRock's investment arm expects the Fed to cut interest rates "around late spring and early summer."
Barclays economists said the ECB would cut interest rates by 25 basis points for the first time in April next year, followed by successive cuts at each policy meeting until January 2025. They had expected the ECB to cut interest rates only from July next year. Barclays said that a faster rate cut than the ECB's pessimistic growth outlook and the faster rate of cooling in inflation should prompt the ECB to cut interest rates sooner. The rate-cutting cycle starting in April and ending in January 2025 should bring the deposit rate down to 225% level. Moreover, even if the start of rate cuts is postponed, the Governing Council is expected to reach a consensus soon to lower the policy rate to neutral at a faster pace.
Christoph Rieger, head of interest rate and credit research at Commerzbank Research, said the slowdown in economic activity and the decline in inflation in the first half of 2024 justified the ECB cutting interest rates for the first time in the summer of 2024. By the end of 2024, the ECB is expected to cut interest rates by 75 basis points as inflationary pressures become more intractable, which is only about half of what the market expects.
Rabobank's head of interest rate strategy, Richard McGuire, said the Bank of England's stance has become more cautious. The Bank of England and the ECB are unlikely to make the market realize that in the near future they will be forced to follow in the footsteps of the Fed. So if the Bank of England and the ECB are not talking about cutting rates right now, it doesn't mean they aren't thinking about cutting rates. It's a question of timing, not direction.
Westpac New Zealand chief economist Kelly Eckhold said the RBNZ had ended its rate hikes as the economy was significantly weaker than almost all commentators expected. Recent data has highlighted a clear start to soften GDP and inflation, which could bring the RBNZ's interest rate path expectations back to a less hawkish one soon. Nonetheless, the RBNZ is likely to be much more cautious than the market expects when considering cutting the official cash rate (OCR).
[Focus of the week].
Monday. The ECB's biennial meeting on fiscal policy and governance in the European Monetary Union runs until 19 December.
08:30 The Reserve Bank of Australia (RBA) released the minutes of its December monetary policy meeting.
11:00 The Bank of Japan announces its interest rate decision.
14:30 Bank of Japan Governor Kazuo Ueda holds a monetary policy press conference.
Wednesday. 01:30 2024 FOMC member and Atlanta Fed President Bostic speaks on the U.S. economic and business outlook.
22:00 SNB releases its quarterly economic bulletin.
22:00 ECB Chief Economist Lien speaks.
Thursday. 02:30 The Bank of Canada releases the minutes of its December monetary policy meeting.
15:20 Bank Indonesia announces interest rate decision.
19:00 The Central Bank of Turkey announces its interest rate decision.
19:00 Brazil's central bank releases inflation report.
Friday. 00:00 ECB Chief Economist Lien speaks.
07:50 The Bank of Japan released the minutes of its October monetary policy meeting.
Editor: Wang Shurui.
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