MarkoKolanovic, a strategist in JPMorgan Chase, believes that central banks may have raised interest rates sharply or near the peak, and the pace of tightening may slow down in the coming months, but it is still too early to evaluate the final interest rate trend.
Some developed economies "lightly step on the brakes"
At the Federal Reserve's meeting on interest rates last week, the Federal Open Market Committee (FOMC) proposed in its resolution statement for the first time that the cumulative effect of monetary policy and its lag on economic activities, inflation and economic development will be considered when determining the timing of future interest rate hikes, which was also interpreted by the market as an important signal to slow down interest rate hikes.
Bauer, chairman of the Federal Reserve, said that although the interest rate may be raised slightly in the future, the final interest rate will be higher than previously expected. Although little progress has been made in reducing inflation, many Fed policymakers hinted in their latest speeches that they would consider raising interest rates slightly at the next policy meeting. The federal funds rate futures show that the expectation of raising interest rates by 75 basis points in 65438+February has cooled down.
In addition to the Federal Reserve, many developed economies are also beginning or preparing to slow down the pace of austerity. Last month, the Bank of Canada unexpectedly decided to raise interest rates by only 50 basis points. Mackler, governor of the Bank of Canada, said that although there is still a long way to go to ensure that inflation is low, stable and predictable, the tightening phase of monetary policy will come to an end. The central bank predicts that economic growth will stagnate in the next few quarters, and points out that financial pressure has appeared in some markets in recent months.
RBC, Royal Bank of Canada, released a report saying that the global environmental deterioration, the slowdown of domestic growth, the early signs of weak labor market and the faster-than-expected decline in the overall inflation rate all support the slowdown in Canada's interest rate hike, and the impact of interest rate hike has not yet fully affected a wider range of economic activities. Canada's economy is expected to experience a moderate recession in the first half of next year. The central bank will raise interest rates by 25 basis points in June 5438+February, and then the interest rate will remain at 4%.
The Reserve Bank of Australia began to take the initiative to slow down the rate hike in May 438+10. On June 1 day of this month, it was announced that the benchmark interest rate would be raised by 25 basis points to 2.85%, which is the seventh rate hike since this year. The minutes of the meeting pointed out that the scale and timing of future interest rate hikes will continue to depend on the upcoming data and the assessment of inflation and labor market prospects.
The Reserve Bank of Australia believes that there are signs that the economy is losing momentum, so it is necessary to take cautious measures. Rising borrowing costs have put pressure on heavily indebted Australian families. In addition, the latest purchasing managers' index survey shows that service industry activities are deteriorating, and the demand for Australian exports is affected by the global economic slowdown.
Last week, the Bank of England raised the benchmark interest rate by 75 basis points to 3%, but the Bank of England stressed that the peak interest rate will be lower than the level expected by the financial market (that is, it will peak at 5.25% next year) and warned that if the interest rate follows the path expected by the market, it may trigger a two-year recession. "We can't make a commitment to the future interest rate, but based on the current situation, the rate of interest rate increase will be lower than the current price in the financial market." AndrewBailey, governor of the Bank of England, said.
More and more people think that the British economy is in a quagmire. In recent months, China's PMI has been declining. Under the pressure of inflation, retail sales dropped from August to September respectively. The agency predicts that Britain's GDP will shrink by 0.5% in the third quarter, and the data will be released on Friday. The challenges left to the British government and the central bank are becoming more and more arduous. Tim Graff, head of macro strategy at State Street EMEA, said that the peak interest rate may be close to 4% to 4.25%. "The information of the central bank is obviously doveish, and the economy has fallen into recession, which is expected to last until 2023, limiting the necessity of raising interest rates substantially. Next, the focus will shift to the autumn budget report. "
Emerging markets act in advance.
Policy changes in emerging markets are faster than in developed economies. According to the statistics of Dow Jones Market, five of the 18 emerging market central banks increased by 325 basis points in June, 438+00, far below the scale of more than 800 basis points in June and July.
The International Monetary Fund (IMF) has previously warned that the spillover effect of interest rate hikes in developed economies may harm emerging market economies. Only when domestic inflation expectations are stable can emerging markets continue to provide policy support. The IMF believes that due to its limited fiscal stimulus space, exchange rate fluctuations may lead to a large outflow of capital from emerging markets and impact the economy.
As the "Depth Charge" of this round of global interest rate hikes, many Central and Eastern European countries have considered ending the tightening cycle.
The Czech Republic took the lead in stopping the interest rate hike cycle in August this year. Last week, the Czech central bank kept its benchmark interest rate at 7.00% for the third time in a row. The forecast of the central bank shows that the Czech economy will shrink by 0.7% in 2023, while the previous growth forecast was 1. 1%. Most policy makers in the country believe that although the inflation rate may remain high before the end of the year, it is close to the peak, and the interest rate level is enough to ease the domestic price pressure. Alles mihir, governor of the Czech Central Bank, said that despite the upward pressure of inflation, the possibility of economic recession at home and abroad is increasing, and interest rates will remain stable for a long time to come.
The Hungarian Central Bank kept the basic interest rate at 13.00% at the end of 10. The resolution stated that tight monetary conditions will be maintained for a long time to ensure the stability of inflation expectations and achieve inflation targets in a sustainable way. BarnabasVirag, deputy governor of the National Bank of Hungary, said that the improvement of the basic consumer price trend was "taking shape".
Poland's central bank kept its key reference rate unchanged at 6.75% last month. Poland has continuously raised interest rates by 1 1 times since the beginning of the tightening cycle in June, 2002. Due to the increase in energy tariffs and the rising costs of energy and agriculture caused by the situation in Ukraine, Poland's inflation rate reached the highest level in 26 years in September. Poland's central bank believes that high interest rates limit demand growth.
Starting from the historical low of 2.00% in March of 20021,the Brazilian central bank stopped after raising interest rates by 1 175 basis points. In September, Brazil's inflation rate dropped to 7. 17%, the lowest level since April last year. However, the Brazilian central bank remains vigilant, saying that the possibility of "restarting the interest rate hike cycle" cannot be ruled out.
Chile's central bank raised the overnight rate by 50 basis points to 1 1.25% last month. The Chilean central bank said that the current expected interest rate has reached the highest level in this cycle. In the future, interest rates will remain at the current level to achieve the long-term inflation target.
How will the future develop?
In an interview with China Business News, SteenJacobsen, chief economist of Shengbao, said that global central banks will reach the policy "hawkish peak" around the first quarter of next year and usher in a turning point in the global economy. Before that, with the continuous rise of global interest rates, inflation may remain at a high level in the short term, and then gradually subside.
Klanovics, an analyst in JPMorgan Chase, said that as the inflation rate begins to decline, central banks may slow down the pace of interest rate hikes in the next few months, and it is expected that the global aggressive interest rate hike phase will end in early 2023. However, the slowdown in interest rate hikes does not necessarily mean that the interest rate centers of central banks will decrease. "The market is eager to see the aggressive interest rate hike cycle peak this year, but it would be a big mistake if the central bank is expected to end the struggle against inflation ahead of schedule, which requires a signal that inflation will fall." He wrote.
Nomura Securities reported that the global long-term yield has limited upside, because the real yield of major countries such as the United States, Britain, Germany, Australia and Canada has peaked, and the central banks of some developed countries have shown signs that they may stop raising interest rates.
JeanBoivin, director of the BlackRock Investment Research Institute, is relatively cautious and thinks that any optimism about austerity expectations may be premature. "We see that the central bank is on the road of excessive austerity." He said in Outlook Weekly, "The Fed, like other central banks in developed markets, will only stop when the serious damage caused by interest rate hikes becomes more obvious. We believe that interest rates have reached a level that may trigger a recession. "