Should the pace of interest rate cuts be accelerated? Global central banks are facing a new 'enemy': turbulent financial markets
嫦娥的情人矩
发表于 2024-8-7 10:44:50
1219
0
0
In the past year, central banks around the world have been weighing the risks of high inflation rates and the possibility of economic recession. Now, central bank decision-makers may need to consider a new dynamic factor: turbulent financial markets.
The initial reaction of central bank decision-makers around the world to the stock market crash on Black Monday shows that officials were not too scared - the Reserve Bank of Australia maintained interest rates at a 12 year high on Tuesday and refused to cut rates in the coming months; San Francisco Federal Reserve Chairman Daly only stated on Monday that he would cut interest rates in the "next few quarters" and pointed out that the market may be overly moving in one direction; Although the Bank of Japan, Ministry of Finance, and financial regulatory agencies held a meeting on Tuesday to discuss market issues, the general view that the Japanese economy is recovering has not changed.
It seems that they were also boosted by the calm attitude shown by these central bankers. On Tuesday, stock markets from Tokyo to New York experienced varying degrees of rebound.
However, some market traders are still reminding investors not to conclude that the turbulence has ended.
The global strategist of Brown Brothers Harriman Company stated that until more accurate data shows that the United States is not in recession, "due to fear dominating, volatility in all markets is expected to intensify.
The recent situation has actually shown that the tightening of financial conditions will create new constraints on economic growth. The decline in inflation rate already means that the actual impact of high interest rates by the central bank is increasing. Currently, high market volatility may prompt the central bank to take greater or more frequent easing measures before the end of the year.
In fact, according to Bank of America's statistics, in the three months ending at the end of July, central banks around the world have cumulatively cut interest rates up to 35 times, the highest number since the beginning of the pandemic in 2020. In the past 25 years, the most frequent rate cuts by global central banks in a three-month rolling cycle was as of May 2020, when central banks around the world cut interest rates a total of 92 times in three months. By contrast, during the height of the 2009 financial crisis, global central banks implemented a total of 76 interest rate cuts in the three months ending in April of that year.
It can be foreseen that this number (35 interest rate cuts) is likely to climb further in the coming months.
James Knightley, Chief International Economist at ING Financial Markets, stated that although current information still suggests a soft landing is possible. But in order to achieve a soft landing, central banks around the world (not just the Federal Reserve) will need to adjust policy rates to a more neutral level faster than they previously suggested& amp;quot;
Background report from Caixin News Agency: One article interpretation: Where have major central banks around the world reached in cutting interest rates? Who else hasn't taken action?
One of the triggers for this stock market crash is the weaker than expected July non farm payroll report in the United States, especially the unemployment rate triggering the "Sam's Rule" threshold that foreshadows an economic recession. This has led people to believe that the failure of Federal Reserve Chairman Powell and his colleagues to lower interest rates at the meeting on July 30-31 was a mistake.
Although broader data shows that almost no one is worried about a credit crunch right now. The Federal Reserve's survey on Monday showed that the number of banks tightening loan standards in the previous quarter decreased, while demand for commercial and industrial loans no longer deteriorated. However, the sustained downturn of any risky asset could weaken the recruitment desire of companies and the sustained consumption willingness of consumers, thereby increasing the risk of economic recession - in the past three weeks, the global stock market value has shrunk by about $6.4 trillion at one point.
Robert Sockin, Senior Global Economist at Citigroup, stated that the narrative of weak economic activity and recession concerns may self reinforce.
Data from the interest rate futures market shows that although the expectation of a significant interest rate cut by the Federal Reserve has slightly cooled down among market traders on Tuesday, it is still expected that the Fed will cut interest rates by at least 100 basis points before the end of the year. Investors have also increased their bets on interest rate cuts by the Bank of England and the European Central Bank, both of which have already cut interest rates earlier this year.
Note: The green and red lines represent the expected interest rate cuts for 2024 and 2025. It can be seen that on August 6th, the expected interest rate cuts for the year were reduced by nearly 40 basis points
Rob Subbaraman, head of global market research at Nomura, worked at Lehman Brothers during the 2008 financial crisis. He stated that factors such as slowing economic growth, still high interest rates, expensive market valuations, and sudden emotional fluctuations are intertwined, creating an environment where 'anything can collapse'.
He warned, "In this environment, default issues may begin to become more severe, which could have a ripple effect on the economy. We haven't encountered this yet. But I think this environment is becoming increasingly mature, and we may start to see pressure on the financial system
It is worth mentioning that the current cycle has actually witnessed catastrophic accidents driven by the market. For example, people can easily evoke memories of March 2023, when some regional banks in the United States collapsed under the pressure of rising borrowing costs, triggering a broader crisis of trust worldwide and ultimately dragging down the century old Swiss bank Credit Suisse
CandyLake.com 系信息发布平台,仅提供信息存储空间服务。
声明:该文观点仅代表作者本人,本文不代表CandyLake.com立场,且不构成建议,请谨慎对待。
声明:该文观点仅代表作者本人,本文不代表CandyLake.com立场,且不构成建议,请谨慎对待。
猜你喜欢
- Be vigilant against financial market turbulence in the context of rising interest rates
- Will US stocks face more turbulence in a high interest rate environment as the banking stock index reaches its lowest level in three years?
- Analysis of OpenAI Board Turbulence: Potential Causes and Subsequent Effects
- What impact does the turbulence of OpenAI have on company valuation? The employee stock ownership sale plan will verify this point
- The Chairman of the US SEC criticized AI: "Herd effect" may inadvertently lead to financial markets falling into crisis!
- Raising or lowering interest rates? The disagreement between the Federal Reserve and Wall Street may cause unease in financial markets
- Biden's withdrawal from the election triggered a turbulent opening on Monday: the US dollar fell, gold surged, and US stock futures rose
- After the financial market earthquake, Japan's top foreign exchange official sends a signal to stabilize the market
- Who is in charge of the White House? Voting officially begins! Complete sorting of policy proposals! Global financial markets enter turbulent times
-
11月21日、2024世界インターネット大会烏鎮サミットで、創業者、CEOの周源氏が大会デジタル教育フォーラムとインターネット企業家フォーラムでそれぞれ講演、発言したことを知っている。周源氏によると、デジタル教 ...
- 不正经的工程师
- 昨天 16:36
- 支持
- 反对
- 回复
- 收藏
-
アリババは、26億5000万ドルのドル建て優先無担保手形と170億元の人民元建て優先無担保手形の定価を発表した。ドル債の発行は2024年11月26日に終了する予定です。人民元債券の発行は2024年11月28日に終了する予定だ ...
- SOGO
- 3 天前
- 支持
- 反对
- 回复
- 收藏
-
スターバックスが中国事業の株式売却の可能性を検討していることが明らかになった。 11月21日、外国メディアによると、スターバックスは中国事業の株式売却を検討している。関係者によると、スターバックスは中国事 ...
- 献世八宝掌
- 前天 16:29
- 支持
- 反对
- 回复
- 收藏
-
【意法半導体CEO:中国市場は非常に重要で華虹と協力を展開】北京時間11月21日、意法半導体(STM.N)は投資家活動の現場で、同社が中国ウェハー代工場の華虹公司(688347.SH)と協力していると発表した。伊仏半導体 ...
- 黄俊琼
- 前天 14:29
- 支持
- 反对
- 回复
- 收藏