Breaking News
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Take Five: Week of the central banks

Economy Mar 12, 2021 08:30PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
2/2 © Reuters. FILE PHOTO: The Federal Reserve building is pictured in Washington, DC 2/2
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio

(Reuters) - 1/ TIME TO PUSH BACK?

After a stunning selloff in U.S. Treasuries took benchmark 10-year yields above 1.6%, the highest in a year, the March 16-17 Federal Reserve meeting will be watched closely for hints policymakers are concerned about yields, asset bubbles and inflation.

A repricing of market interest rate expectations to anticipate a Fed hike as early as late 2022 is at odds with the Fed's aim of keeping rates unchanged until the end of 2023. The Fed has appeared unperturbed so far by higher bond yields, but it may feel it's time to push back against those rate-hike bets.

It is also expected to release fresh forecasts on economic growth as vaccines are distributed.

Graphic: Eurodollar futures and Fed hike expectations -


The central bank which pioneered yield curve control faces one of its toughest policy reviews on March 18-19.

The Bank of Japan will likely insert clearer guidance in its statement on what it sees as an acceptable level of fluctuation in long-term interest rates, according to sources -- a sign it won't tolerate rises that hurt the economy.

Governor Haruhiko Kuroda and his deputy Masayoshi Amamiya have sent mixed messages on loosening the 10-year yield target band. Higher yields would acknowledge a global move higher but might spur unintended worries about policy tightening.

Given a nascent economic recovery, the BOJ may even suggest scope for more negative short-term rates. In the midst of this, financial year-end flows back into yen are accelerating. A currency rally will add to the BOJ's headaches.

Graphic: BOJ balance sheet & yields -


Thursday brings central bank meetings in Britain and Norway.

The Bank of England is not seen unveiling additional policy easing despite concerns over the recent spike in borrowing costs.

Instead, any action such as upping the BoE's bond-buying firepower is likely to come later in the year - perhaps in May, when the next set of economic forecasts emerge.

With first-quarter GDP data expected to show a near 4% drop on the back of pandemic-linked lockdowns and Brexit disruptions, economic recovery is expected to be gradual. A majority of economists polled by Reuters expect GDP will take two years to return to pre-COVID-19 levels.

Norges Bank is also tipped to keep rates unchanged but it may adopt a much more hawkish tone given signs of economic recovery in Norway, especially in housing.

Graphic: UK yield -


In emerging markets, meanwhile, the only way for interest rates to go may be up. That's the message we might hear from several central banks over coming days.

Most have faced rising inflation pressures for some time but now they are also confronted by higher U.S. Treasury yields, which raise borrowing costs for everyone. For oil importers, Brent crude prices above $70 is an added problem -- all this while economies are still reeling from the coronavirus impact.

Central banks in Brazil and Turkey -- meeting on Wednesday and Thursday respectively -- are most likely to raise rates. Markets will also find out on Thursday if Indonesia's rate-cutting cycle has come to an end.

Egypt meanwhile is seen standing pat on Thursday even in the face of rising commodity prices and inflation nudging higher.

Graphic: EM central banks rate cuts -


In the euro area, investors' focus turns to politics.

The German states of Baden-Wuerttemberg and Rhineland-Palatinate hold elections on Sunday that are seen as a key test of voter sentiment ahead of national polls in September which will determine who succeeds Angela Merkel as Chancellor.

The Baden-Wuerttemberg vote is one to watch, since a face mask procurement scandal has muddied the waters for Merkel's Christian Democrats, whose leader Armin Laschet hopes to become the next Chancellor.

Then there are Dutch national elections on March 15-17, for which authorities are relaxing evening curfew rules introduced to combat the spread of COVID-19. Polls suggest Prime Minister Mark Rutte's conservative VVD will remain the largest party, although public support has declined recently over his coronavirus policies.

Graphic: COVID-19 vaccinations - the race is on -


Take Five: Week of the central banks

Related Articles

Swiss franc not highly valued - SNB's Jordan
Swiss franc not highly valued - SNB's Jordan By Reuters - Sep 30, 2022

ZURICH (Reuters) - The Swiss franc is not highly valued despite its nominal rise, Swiss National Bank Chairman Thomas Jordan told a Swiss newspaper, adding the central bank...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
علي احمد
علي احمد Mar 14, 2021 11:23AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email