Global Central Bank Watch

What to make of the latest forward guidance

Now that inflation has passed its peak and many central banks have begun to slow the pace of policy tightening, markets are back to scouring their communications for evidence of what’s to come. So far...

· 14 mins read

Global Central Bank Watch

The signs of shifting cycles

In recent weeks, attention has shifted from the likely size of rates hikes towards the timing of peaks and the prospect of ultimate cuts. History can tell us little about the likely profile since no...

· 12 mins read

Global Central Bank Watch

Multiple challenges raise risk of policy errors

Recent developments have made a bad situation worse for central banks and what was already a challenging environment has become even more challenging. Not only is inflation proving more persistent...

· 12 mins read

Global Central Bank Watch

Will frontloading make hard landings less likely?

The pace of policy tightening has increased still further, with many central bankers arguing that rate hikes must be “frontloaded” to tackle inflation risks quickly. In the current environment, this...

· 10 mins read

Global Central Bank Watch

Slamming on the brakes

It’s been a momentous few weeks in the world of central banking. Persistent price pressures have prompted a hawkish shift almost across the board and we now anticipate the most aggressive and...

· 9 mins read

Global Central Bank Watch

Balance sheet policy set to diverge

The focus of recent weeks has been on the pace and synchronisation of interest rate hikes, with almost all major central banks now engaged or set to engage in tightening cycles and many taking an...

· 12 mins read

Global Central Bank Watch

Tightening risks recession but inaction would be worse

The war in Ukraine has worsened the dilemma for the world’s major central banks: on the one hand it will push inflation even higher, but on the other it has raised the downside risks to real activity...

· 11 mins read

Global Central Bank Watch

Hiking like it’s 1994?

Monetary policymakers are under pressure, with inflation historically high and acute shortages threatening to boost price pressures further still. Accordingly, there is a risk that some central banks...

· 10 mins read

Global Central Bank Watch

A hawkish pivot

With underlying inflation set to stay uncomfortably high for at least the next six months, we expect most central banks to continue or begin raising interest rates next year. But in some cases...

· 6 mins read

Global Central Bank Watch

Rate hikes brought forward, but end point still low

There has been a hawkish shift among many of the world’s central banks over recent weeks as inflation has continued to surprise on the upside. In this Global Central Bank Watch, we assess the reasons...

· 15 mins read

Global Central Bank Watch

How will central banks respond to the inflation threat?

The rise in inflation and the question of how central banks will respond has dominated headlines over recent weeks. In this Global Central Bank Watch, we set out a framework for thinking about how the...

· 16 mins read

Global Central Bank Watch

Central bank mission creep

There have been several cases of central bank mission creep in recent months, with policy remits widening to cover areas other than consumer price inflation. The Bank of England is now helping to...

· 15 mins read

Global Central Bank Watch

Taper talk a prelude to bigger policy debate

Talk of tapering in recent weeks has been premature and we suspect that most major central banks will keep up asset purchases at their current pace for the rest of the year. Assuming that tapering...

· 15 mins read

Global Central Bank Watch

Vaccines won’t preclude looser policy

The encouraging news about vaccines has led us to expect most restrictions in advanced economies to be removed by Q2 next year, allowing them to embark on steeper recoveries towards their pre-virus...

· 15 mins read

Global Central Bank Watch

Average inflation targets from a global perspective

For the past thirty years the orthodoxy has been that central banks should focus on controlling inflation, targeting a rate (normally 2%) over a key policy horizon (often 18 months to two years ahead)...

· 13 mins read