Latest news with #monetarypolicy
Zawya
6 hours ago
- Business
- Zawya
Oil, war and tariffs tear up markets' central bank roadmap
LONDON - Investor unease about an increasingly uncertain environment is rising, as Norway's shock rate cut on Thursday highlights how U.S. tariffs, Middle East conflict and a shaky dollar make global monetary policy and inflation even harder to predict. Norway's crown slid roughly 1% against the dollar and the euro in a sign of how unexpected the move was. And Switzerland, which cut borrowing costs to 0% on Thursday, confounded some expectations among traders for a return to negative rates in the deflation-hit nation, as its central bank warned of a cloudy global outlook. Just a day earlier the U.S. Federal Reserve kept rates on hold and chair Jerome Powell said "no one" had conviction on the rate path ahead. The conclusion for markets: monetary policy uncertainty is one more headwind to navigate against a backdrop of geopolitical and trade risks. Global stocks pulled away from recent peaks, a gauge of expected volatility in European equities touched a two-month high as stocks across the region fell and government bonds, usually geopolitical risk havens, sold off. "We're at a moment of considerable policy and macro uncertainty," said BlueBay chief investment officer at RBC Global Asset Management Mark Dowding. "We can't see a clear trend on interest rates," he added, which meant he was holding back from active market bets across the group's investment portfolios. Volatility was set to rise, some investors said, because a choppy dollar and oil prices whipped around by geopolitics meant that central banks were far less able to provide markets and investors a clear route map for the future. "You cannot just take your cues from the central banks anymore as they are facing a harder job of reading the economy themselves," T.S. Lombard director of European and global macro Davide Oneglia said. BROKEN MODELS Rate-cutting European central banks are not just diverging from the Fed, which is grappling with the inflationary risks of President Donald Trump's tariffs. They are also struggling to navigate a new era where the dollar, the lynchpin of world trade, commodity prices and asset valuations, has turned weaker and more volatile under trade war stress and government debt anxiety. "That's a massive, massive fundamental shift in global markets that everyone is trying to assess," Monex Europe head of Macro Research Nick Rees said. "All of those standard economic rules of thumb we use for forecasting are completely broken right now." The dollar is down almost 9% against other major currencies this year but has risen following the outbreak of a war between Israel and Iran. European Central Bank policymaker Francois Villeroy de Galhau said on Thursday the ECB might have to adapt its rate cut plans if oil price volatility was long-lasting. The new status quo in markets could well be an era of central bank surprises that create rapid shifts in the market narrative, asset pricing and volatility trends, analysts said. "We're getting into this next cycle in which variables are much more volatile, because, rather than (monetary policy) being just easily predictable, events just take over and policy and human factors, as we now know with Donald Trump, play an important role," Oneglia said. Norway's surprise cut came because the crown was a "runaway top currency" of the trade-war era, added Societe Generale's head of FX strategy Kit Juckes. With investors chasing around the world to identify stores of wealth that are not U.S. dollars, meanwhile, the Swiss franc has soared, cutting the costs of imports and pushing the economy into deflation. On Thursday, the franc rose against the dollar as traders saw the SNB's cut as too small to keep deflation at bay. Ninety One multi-asset head John Stopford said the hazard risk was rising for global stocks and that options products that aim to offer protection from incoming volatility looked fairly cheap. He was buying bonds issued in nations where inflation and rates could come down materially, such as New Zealand, but was negative on longer-dated U.S. Treasuries and German Bunds where economic uncertainty was higher and government borrowing was likely to rise. Global stocks remain almost 20% above their April trough, after investors relaxed about tariffs. Stopford said there was more to worry about in the short term. "The stock market feels like it's a thatched house in a hot country with a fire hazard risk, and people aren't charging much to insure the house," Stopford added. (Reporting by Naomi Rovnick and Dhara Ranasinghe; Editing by Toby Chopra)
Reuters
20 hours ago
- Business
- Reuters
Oil, war and tariffs tear up markets' central bank roadmap
LONDON, June 19 (Reuters) - Investor unease about an increasingly uncertain environment is rising, as Norway's shock rate cut on Thursday highlights how U.S. tariffs, Middle East conflict and a shaky dollar make global monetary policy and inflation even harder to predict. Norway's crown slid roughly 1% against the dollar and the euro , in a sign of how unexpected the move was. And Switzerland, which cut borrowing costs to 0% on Thursday, confounded some expectations among traders for a return to negative rates in the deflation-hit nation, as its central bank warned of a cloudy global outlook. Just a day earlier the U.S. Federal Reserve kept rates on hold and chair Jerome Powell said "no one" had conviction on the rate path ahead. The conclusion for markets: monetary policy uncertainty is one more headwind to navigate against a backdrop of geopolitical and trade risks. Global stocks pulled away from recent peaks, a gauge of expected volatility in European equities (.V2TX), opens new tab touched a two-month high as stocks across the region fell and government bonds, usually geopolitical risk havens, sold off. "We're at a moment of considerable policy and macro uncertainty," said BlueBay chief investment officer at RBC Global Asset Management Mark Dowding. "We can't see a clear trend on interest rates," he added, which meant he was holding back from active market bets across the group's investment portfolios. Volatility was set to rise, some investors said, because a choppy dollar and oil prices whipped around by geopolitics meant that central banks were far less able to provide markets and investors a clear route map for the future. "You cannot just take your cues from the central banks anymore as they are facing a harder job of reading the economy themselves," T.S. Lombard director of European and global macro Davide Oneglia said. Rate-cutting European central banks are not just diverging from the Fed, which is grappling with the inflationary risks of President Donald Trump's tariffs. They are also struggling to navigate a new era where the dollar , the lynchpin of world trade, commodity prices and asset valuations, has turned weaker and more volatile under trade war stress and government debt anxiety. "That's a massive, massive fundamental shift in global markets that everyone is trying to assess," Monex Europe head of Macro Research Nick Rees said. "All of those standard economic rules of thumb we use for forecasting are completely broken right now." The dollar is down almost 9% against other major currencies this year but has risen following the outbreak of a war between Israel and Iran. European Central Bank policymaker Francois Villeroy de Galhau said on Thursday the ECB might have to adapt its rate cut plans if oil price volatility was long-lasting. The new status quo in markets could well be an era of central bank surprises that create rapid shifts in the market narrative, asset pricing and volatility trends, analysts said. "We're getting into this next cycle in which variables are much more volatile, because, rather than (monetary policy) being just easily predictable, events just take over and policy and human factors, as we now know with Donald Trump, play an important role," Oneglia said. Norway's surprise cut came because the crown was a "runaway top currency" of the trade-war era, added Societe Generale's head of FX strategy Kit Juckes. With investors chasing around the world to identify stores of wealth that are not U.S. dollars, meanwhile, the Swiss franc has soared, cutting the costs of imports and pushing the economy into deflation. On Thursday, the franc rose against the dollar as traders saw the SNB's cut as too small to keep deflation at bay. Ninety One multi-asset head John Stopford said the hazard risk was rising for global stocks and that options products that aim to offer protection from incoming volatility looked fairly cheap. He was buying bonds issued in nations where inflation and rates could come down materially, such as New Zealand, but was negative on longer-dated U.S. Treasuries and German Bunds where economic uncertainty was higher and government borrowing was likely to rise. Global stocks (.MIWD00000PUS), opens new tab remain almost 20% above their April trough, after investors relaxed about tariffs. Stopford said there was more to worry about in the short term. "The stock market feels like it's a thatched house in a hot country with a fire hazard risk, and people aren't charging much to insure the house," Stopford added.
Yahoo
20 hours ago
- Business
- Yahoo
Analysis-Oil, war and tariffs tear up markets' central bank roadmap
By Naomi Rovnick and Dhara Ranasinghe LONDON (Reuters) -Investor unease about an increasingly uncertain environment is rising, as Norway's shock rate cut on Thursday highlights how U.S. tariffs, Middle East conflict and a shaky dollar make global monetary policy and inflation even harder to predict. Norway's crown slid roughly 1% against the dollar and the euro in a sign of how unexpected the move was. And Switzerland, which cut borrowing costs to 0% on Thursday, confounded some expectations among traders for a return to negative rates in the deflation-hit nation, as its central bank warned of a cloudy global outlook. Just a day earlier the U.S. Federal Reserve kept rates on hold and chair Jerome Powell said "no one" had conviction on the rate path ahead. The conclusion for markets: monetary policy uncertainty is one more headwind to navigate against a backdrop of geopolitical and trade risks. Global stocks pulled away from recent peaks, a gauge of expected volatility in European equities touched a two-month high as stocks across the region fell and government bonds, usually geopolitical risk havens, sold off. "We're at a moment of considerable policy and macro uncertainty," said BlueBay chief investment officer at RBC Global Asset Management Mark Dowding. "We can't see a clear trend on interest rates," he added, which meant he was holding back from active market bets across the group's investment portfolios. Volatility was set to rise, some investors said, because a choppy dollar and oil prices whipped around by geopolitics meant that central banks were far less able to provide markets and investors a clear route map for the future. "You cannot just take your cues from the central banks anymore as they are facing a harder job of reading the economy themselves," T.S. Lombard director of European and global macro Davide Oneglia said. BROKEN MODELS Rate-cutting European central banks are not just diverging from the Fed, which is grappling with the inflationary risks of President Donald Trump's tariffs. They are also struggling to navigate a new era where the dollar, the lynchpin of world trade, commodity prices and asset valuations, has turned weaker and more volatile under trade war stress and government debt anxiety. "That's a massive, massive fundamental shift in global markets that everyone is trying to assess," Monex Europe head of Macro Research Nick Rees said. "All of those standard economic rules of thumb we use for forecasting are completely broken right now." The dollar is down almost 9% against other major currencies this year but has risen following the outbreak of a war between Israel and Iran. European Central Bank policymaker Francois Villeroy de Galhau said on Thursday the ECB might have to adapt its rate cut plans if oil price volatility was long-lasting. The new status quo in markets could well be an era of central bank surprises that create rapid shifts in the market narrative, asset pricing and volatility trends, analysts said. "We're getting into this next cycle in which variables are much more volatile, because, rather than (monetary policy) being just easily predictable, events just take over and policy and human factors, as we now know with Donald Trump, play an important role," Oneglia said. Norway's surprise cut came because the crown was a "runaway top currency" of the trade-war era, added Societe Generale's head of FX strategy Kit Juckes. With investors chasing around the world to identify stores of wealth that are not U.S. dollars, meanwhile, the Swiss franc has soared, cutting the costs of imports and pushing the economy into deflation. On Thursday, the franc rose against the dollar as traders saw the SNB's cut as too small to keep deflation at bay. Ninety One multi-asset head John Stopford said the hazard risk was rising for global stocks and that options products that aim to offer protection from incoming volatility looked fairly cheap. He was buying bonds issued in nations where inflation and rates could come down materially, such as New Zealand, but was negative on longer-dated U.S. Treasuries and German Bunds where economic uncertainty was higher and government borrowing was likely to rise. Global stocks remain almost 20% above their April trough, after investors relaxed about tariffs. Stopford said there was more to worry about in the short term. "The stock market feels like it's a thatched house in a hot country with a fire hazard risk, and people aren't charging much to insure the house," Stopford added. 擷取數據時發生錯誤 登入存取你的投資組合 擷取數據時發生錯誤 擷取數據時發生錯誤 擷取數據時發生錯誤 擷取數據時發生錯誤
Zawya
a day ago
- Business
- Zawya
As war and tariffs fog the outlook, some central banks trim rates
The Swiss and Norwegian central banks became the latest European rate-setters to ease monetary policy on Thursday, citing a weaker inflation outlook that contrasted sharply with the Federal Reserve's warnings about higher U.S. prices. The Bank of England kept rates on hold as expected, while flagging that they would remain on a "gradual downward path" in a finely balanced statement that also acknowledged "heightened unpredictability" in the global environment. U.S. President Donald Trump's haphazard threats of heavy trade tariffs and an escalating Israel-Iran conflict have left top central banks trying to steer policy in conditions of near-unprecedented uncertainty for the global economy. Speaking after a two-day meeting where Fed policymakers kept rates on hold, the U.S. central bank's chair Jerome Powell on Wednesday laid out how import tariffs imposed on America's trading partners will drive up prices for U.S. consumers. Trump is due in coming days to say whether tariffs currently pegged at a 10% baseline will rise - in some cases to more than double that level - in a move seen weakening the global economy and so keeping a lid on inflation pressures in many countries. "Inflationary pressure has decreased compared to the previous quarter," the Swiss National Bank said as it cut rates by 25 basis points to zero and did not rule out returning to negative rates. In a move that took most analysts by surprise, even Norway's central bank - long the most hawkish of major central banks - also cut its policy rate by 25 basis points said there were more cuts to come due to a more benign outlook for prices. "Inflation has declined since the monetary policy meeting in March, and the inflation outlook for the coming year indicates lower inflation than previously expected," Governor Ida Wolden Bache said of inflation which slowed to 2.8% in May. That mirrored the view taken by Sweden's central bank, which cut its key interest rate to 2.00% from 2.25% on Wednesday and said that, with price pressures weak, it may ease further before the end of the year to boost sluggish growth. On June 6, the European Central Bank cut its main interest rate for the eighth time in the past year and signalled a pause in policy easing at least next month because inflation was now safely back at its 2% target after three years of overshooting. CAUTION, LITTLE CONVICTION Earlier this week the Bank of Japan kept interest rates steady and said it would move cautiously in removing remnants of its massive, decade-long stimulus. Governor Kazuo Ueda said the BOJ's near-term focus was on downside risks, notably the hit from U.S. tariffs. The latest set of central bank decisions, covering most of the Group of 10 major currencies and their economies, gives a snapshot of the impact policymakers expect significantly less free global trade to have. For the U.S. economy, the Fed sketched a modestly stagflationary picture, with growth in 2025 slowing to 1.4%, unemployment rising to 4.5%, and inflation ending the year at 3%, well above the current level. Fed policymakers signalled borrowing costs are still likely to fall in 2025, but chair Powell cautioned against putting too much weight on that view. "No one holds these ... rate paths with a great deal of conviction, and everyone would agree that they're all going to be data-dependent," he said. For other economies, the consensus for now is that the tariffs will inevitably hit their local industries and so weaken growth and jobs - but at least their consumers will be spared the inflationary hit coming for their U.S. counterparts. That all could change, depending on whether the escalation of conflict in the Middle East drives oil prices substantially higher than the gains seen so far and whether America's trading partners end up retaliating with tariffs of their own. That will become clearer from July 9, when Trump has said countries will face higher tariffs across the board unless they reach a deal with him. (Additional reporting by Howard Schneider in Washington; Leika Kihara in Tokyo; Simon Johnson in Stockholm; Writing by Mark John; Editing by Catherine Evans)
Reuters
a day ago
- Business
- Reuters
As war and tariffs fog the outlook, some central banks trim rates
ZURICH, June 19 (Reuters) - The Swiss and Norwegian central banks became the latest European rate-setters to ease monetary policy on Thursday, citing a weaker inflation outlook that contrasted sharply with the Federal Reserve's warnings about higher U.S. prices. The Bank of England kept rates on hold as expected, while flagging that they would remain on a "gradual downward path" in a finely balanced statement that also acknowledged "heightened unpredictability" in the global environment. U.S. President Donald Trump's haphazard threats of heavy trade tariffs and an escalating Israel-Iran conflict have left top central banks trying to steer policy in conditions of near-unprecedented uncertainty for the global economy. Speaking after a two-day meeting where Fed policymakers kept rates on hold, the U.S. central bank's chair Jerome Powell on Wednesday laid out how import tariffs imposed on America's trading partners will drive up prices for U.S. consumers. Trump is due in coming days to say whether tariffs currently pegged at a 10% baseline will rise - in some cases to more than double that level - in a move seen weakening the global economy and so keeping a lid on inflation pressures in many countries. "Inflationary pressure has decreased compared to the previous quarter," the Swiss National Bank said as it cut rates by 25 basis points to zero and did not rule out returning to negative rates. In a move that took most analysts by surprise, even Norway's central bank - long the most hawkish of major central banks - also cut its policy rate by 25 basis points said there were more cuts to come due to a more benign outlook for prices. "Inflation has declined since the monetary policy meeting in March, and the inflation outlook for the coming year indicates lower inflation than previously expected," Governor Ida Wolden Bache said of inflation which slowed to 2.8% in May. That mirrored the view taken by Sweden's central bank, which cut its key interest rate to 2.00% from 2.25% on Wednesday and said that, with price pressures weak, it may ease further before the end of the year to boost sluggish growth. On June 6, the European Central Bank cut its main interest rate for the eighth time in the past year and signalled a pause in policy easing at least next month because inflation was now safely back at its 2% target after three years of overshooting. Earlier this week the Bank of Japan kept interest rates steady and said it would move cautiously in removing remnants of its massive, decade-long stimulus. Governor Kazuo Ueda said the BOJ's near-term focus was on downside risks, notably the hit from U.S. tariffs. The latest set of central bank decisions, covering most of the Group of 10 major currencies and their economies, gives a snapshot of the impact policymakers expect significantly less free global trade to have. For the U.S. economy, the Fed sketched a modestly stagflationary picture, with growth in 2025 slowing to 1.4%, unemployment rising to 4.5%, and inflation ending the year at 3%, well above the current level. Fed policymakers signalled borrowing costs are still likely to fall in 2025, but chair Powell cautioned against putting too much weight on that view. "No one holds these ... rate paths with a great deal of conviction, and everyone would agree that they're all going to be data-dependent," he said. For other economies, the consensus for now is that the tariffs will inevitably hit their local industries and so weaken growth and jobs - but at least their consumers will be spared the inflationary hit coming for their U.S. counterparts. That all could change, depending on whether the escalation of conflict in the Middle East drives oil prices substantially higher than the gains seen so far and whether America's trading partners end up retaliating with tariffs of their own. That will become clearer from July 9, when Trump has said countries will face higher tariffs across the board unless they reach a deal with him.
