Central Banker Musings Say No Rate Cuts On The Agenda, For Now…

I am not sure what the right collective noun is for a collection of Central Bankers, as they gathered for the European Central Bank’s conference in Sintra Portugal this week. Perhaps it’s a gaggle of bankers, or perhaps a warning of bankers, or how about a uselessness of bankers. Suggestions in the comments please… Nevertheless we got some further triangulation on the trajectory of interest rates across multiple economies. And it reconfirmed my own view, that those baying for rate cuts (yes, many still are in Australia, and the US) despite recent strong inflation reads and lifts in Japan and the ECB) are mistaken. For example, speaking on Wednesday, Bank of England Governor Andrew Bailey said reductions to borrowing costs are “off the table at the moment” even as the threat from inflation recedes following the plunge in energy markets. It is simply too early to consider interest-rate cuts, as we warned households are yet to feel the full effect of the Iran war. European Central Bank Governing Council member Joachim Nagel said he’s keeping an open mind on what action is needed at the next two interest-rate meetings, with uncertainly remaining over the situation in the Middle East and its effect on inflation. New Fed chair Kevin Warsh, said price risks have reduced in recent weeks. But he reiterated his determination to bring inflation back to the Fed’s 2% target as underlined in the recent post decision press conference in the US recently – see my recent post on this. The central bank will deliver price stability, they say despite a 6-year failure so to do. Whilst RBA members did not make an appearance in Sintra, as far as I could tell, these vibes from the conference will clearly impact their thinking, firming up on no forward guidance as to where rates might go, a firmness to raise interest rates again if needed to control inflation, and remember folks, despite the headline hype underlying inflation was up again in Australia, with significant concerns around second order impacts again noted in their recent meeting minutes. All of which means that we should be planning for higher rates for longer, which I will plug into to scenario models and soon update these in terms of home price sensitivity. There is a lot going on here, but do not be fooled into thinking rate cuts are coming to solve everything. They are not. http://www.martinnorth.com/ Details of our one to one service are here: https://digitalfinanceanalytics.com/blog/dfa-one-to-one/ Go to the Walk The World Universe at https://walktheworld.com.au/ Find more at https://digitalfinanceanalytics.com/blog/ where you can subscribe to our research alerts Please consider supporting our work via Patreon: https://www.patreon.com/DigitalFinanceAnalytics The full detailed set of post code data is available as a subscription service. Or make a one-off contribution to help cover our costs via PayPal at: https://www.paypal.me/MartinDFA We also can receive bitcoins at: 13zBL1oRib9VJu8Uc9zUGNhxKDBBgUpDN1 Please share this post to help to spread the word about the state of things.... Caveat Emptor! Note: this is NOT financial or property advice!! 🚨BEWARE OF SCAMMERS🚨 As there are accounts impersonating Walk The World in the comments on YouTube, note that our comments will have a distinguishable verified symbol. And remember that we will never message you asking you to give us money or talk to us on other platforms such as WhatsApp or Telegram