They have made the decision to stop further bond purchases immediately and have started forecasting an interest rate hike in the second or third quarter of next year.
Bank of England Governor Andrew Bailey has said the UK central bank is ready to step in and fight. Your monetary policy committee this week and can give some indication of your intentions. The currency has stopped advocating a target yield for its government bonds, indicating that it will abandon easing against the currency.
But the world’s two biggest central bankers, President Jerome Powell and European Central Bank President Christine Lagarde, think they know more than anyone.
Canadian British Columbia is entering the “reinvestment phase”; RBA may reduce the goal of yield this week
Even though the Fed is expected to announce the start of the declining At his monetary policy meeting, Powell still believes inflation will subside and the US central bank won’t need to raise interest rates just yet. Lagarde of the ECB said he saw no need to raise interest rates until the end of 2022, although he acknowledged that board members spoke a lot about it during their meeting. from last week.
The abrupt new announcement by the Canadian central bank that it will enter a “reinvestment phase” of its asset purchases – that is, it will buy government bonds only to replace maturing ones – was a shock. excess capacity which requires continued monetary policy support (read: low interest rates), this situation could end in “the middle of quarters 2022”.
After Australia’s British Columbia failed to stop the April 2024 surge in bond yields on the 0.1% target – the yield reached 0.8% on Friday – investors now believe the RBA may officially withdraw the return target at its board meeting this week. Yours is scheduled for later this week.
Also on Friday, the report on the United States, which recorded its largest year-over-year advance in three decades, up 4.4%. The, which excludes food and energy and is the Fed’s preferred measure, rose 3.6%, the highest since May 1991.
Biden delays appointment of Fed chairman
Billionaire hedge fund manager Bill Ackman said he recently made a presentation to the New York Fed, which is responsible for executing the US central bank’s monetary policy, and urged the institution to start to tighten monetary policy “immediately”, not only by reducing asset purchases, but above all by raising interest rates as soon as possible.
At the same time, US President Joe Biden’s delay in appointing a Fed chief is creating an increasingly threatening leadership vacuum. This appointment is usually made in October for the term that expires in early February. Even Donald Trump made his announcement on November 2, which shows Biden is later than usual and shouldn’t make his date until he returns from his meetings in Europe.
The longer the delay, the worse the prospect of a second term for Powell. Regardless of the renewal or appointment of Lael Brainard, Fed governor, to succeed him, monetary policy should not undergo any changes, but the wait is uncomfortable.
Especially given the uncertainty over how inflation will continue to rise and when the Fed will act, the delay begins to undermine the credibility of an administration already weakened by the slowness of action on its budget and fiasco of withdrawal from Afghanistan.
Powell is under fire from right and left. Democratic Senator Elizabeth Warren called him a “dangerous man” to head the central bank and explicitly said she would not support his second term. She thinks he takes it too easily on the benches.
Last week, Republican Senator Rick Scott, former governor of Florida, said he would not support Powell’s reappointment unless he changes his behavior “foolishly ignoring high inflation” and stops following the agenda. politics of the Democrats, to the detriment of the well-being of American families. .
Both represent opposing interests in the US Congress. It’s hard to see how Powell will be able to satisfy them both.
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