bullish
Will Central Banks break ranks?
SUMMARY
- After another 50bp from the Fed, we believe that the major impact of changes in expectations of the Fed will now be via the $ rather than via capital markets – the discount rate already having had its impact.
- So too with the ECB; this time a year ago everyone’s favourite synchronised swimmer and Lawyer, Christine Lagarde effectively ruled out any rate rises in 2022, in contrast to market expectations, before, in synch swimming parlance, the ECB performed its part in a perfect Cadence Action of central banks raising rates all year.
- Today she said that the ECB now needs to do more on rates than markets are pricing in, seeming to indicate a break from the Fed.
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