Monetary policy Archives - Read Selective

Fed keeps rates steady, toughens policy stance as ‘soft landing’ hopes grow

But a ‘solid’ economy with still ‘strong’ job growth, Powell said

The US Federal Reserve held interest rates steady on Wednesday but stiffened a hawkish monetary policy stance that its officials increasingly believe can succeed in lowering inflation without wrecking the economy or leading to large job losses.

The Fed’s benchmark overnight interest rate may still be lifted one more time this year to a peak 5.50 per cent-5.75 per cent range, according to updated quarterly projections released by the U.S. central bank, and rates kept significantly tighter through 2024 than previously expected.

“People hate inflation. Hate it,” Fed Chair Jerome Powell said in a press conference after the end of a two-day policy meeting at which central bank officials held the benchmark overnight interest rate in the current 5.25 per cent -5.50 per cent range, but sketched a stricter policy path moving forward in an inflation fight they now see lasting into 2026.

But a “solid” economy with still “strong” job growth, Powell said, will allow the central bank to keep that additional pressure on financial conditions through 2025 with much less of a cost to the economy and labor market than in previous U.S. inflation battles.

Source : https://www.deccanherald.com/business/markets/fed-keeps-rates-steady-toughens-policy-stance-as-soft-landing-hopes-grow-2694733

European Central Bank raises rates to all-time high of 4%, signals end of tightening

The central bank for the 20 countries that use the euro lifted its deposit rate to 4% from 3.75%, taking it to an all-time-high. Markets and economists expect the policy tightening move to be the ECB’s last and now anticipate a lengthy pause, followed by rate cuts in the second half of next year.

European Central Bank raises interest rates to 4%

Markets had seen unchanged rates as the most likely outcome of Thursday’s meeting only days ago but expectations shifted towards a hike after a source close to the discussions said the ECB would raise its 2024 inflation projection in new forecasts.

“Based on its current assessment, the Governing Council considers that the key ECB interest rates have reached levels that, maintained for a sufficiently long duration, will make a substantial contribution to the timely return of inflation to the target,” the ECB said in a statement.

Policymakers have been pulled in opposing directions by stubbornly high price growth figures and rising recession fears.

Inflation is still stuck above 5% and markets do not see it falling back to the ECB’s 2% target even in the longer term as an exceptionally tight labour market pushes up wages and high energy costs keep the pressure on prices.

But growth prospects are fading quickly, partly due to higher interest rates, and even services – long the bloc’s bright spot – have started to weaken, raising the risk the economy will slip into recession.

Source: https://economictimes.indiatimes.com/markets/stocks/news/ecb-raises-rates-but-signals-end-of-policy-tightening/articleshow/103666224.cms?from=mdr

RBI Governor Shaktikanta Das achieves top rating among global central bankers

Reserve Bank of India Governor Shaktikanta Das has been ranked as the top central banker globally by US-based Global Finance magazine.

Das has been rated ‘A+’ in the Global Finance Central Banker Report Cards 2023.

Das has been placed at the top of the list of three central bank governors who have been rated A+.

Grades are based on a scale from A to F for success in inflation control, economic growth goals, currency stability and interest rate management, according to a statement by Global Finance magazine.

An ‘A’ represents an excellent performance down through an ‘F’ for outright failure.

Das is followed by Switzerland Governor Thomas J Jordan and central bank chief of Vietnam Nguyen Thi Hong.

“Fighting inflation, which has been fueled by pent-up demand and disrupted supply chains, has everyone turning to their central bankers for help,” it said.

Global Finance’s annual Central Banker Report Cards celebrate bank governors whose strategies outperformed their peers through originality, creativity and tenacity, it said.

The central bank governors who earned an ‘A’ grade included Roberto Campos Neto of Brazil, Amir Yaron of Israel, Harvesh Kumar Seegolam of Mauritius and Adrian Orr of New Zealand.

Governors who earned an ‘A-‘ grade are Leonardo Villar of Colombia, Hector Valdez Albizu of Dominican Republic, Asgeir Jonsson of Iceland and Perry Warjiyo of Indonesia among others.

Source: https://www.telegraphindia.com/business/rbi-governor-shaktikanta-das-achieves-top-rating-among-global-central-bankers/cid/1963177