Central banks made some important decisions this week. These were as follows:
- Firstly, the Fed on Wednesday caused some movements in the markets. The Federal Reserve raised interest rates by 0.25% (25 basis points). Furthermore, Fed Chair Jerome Powell’s comments that “the disinflationary process has begun” cause hopes that the Fed will end its tightening cycle in March.
- Secondly, the Bank of England also hiked rates on Thursday, with a 7 – 2 split for that decision. However, the BoE suggested that inflation may have reached a peak, softening the language in the following statement from “we would act aggressively if necessary” to “if there were signs of more persistent pressures.”
- Lastly, the ECB cemented the rate hike week with a 50 bps increase, but also lowered in its outlook the number of additional rate hikes from two to one. Instead, the Governing Council declared a move towards meeting-by-meeting decision-making, dropping the crucial forward guidance (again).
We have discussed these critical macro factors in our video analysis, which you can watch below: