Central Banks: Busy Doing Nothing

Its a busy week for central banks with BSP for the Philippines here in Asia, as well as the Fed and the ECB. None of them is likely to do anything to policy.

ECB Presidents

 Source Sutterstock

Different reasons for inaction

The BSP won't cut rates this month, because inflation nicked up a tenth above the consensus forecast, to come in at 1.3% for November. We don't think they are done just yet, but this is an opportune time for them to take a pause from the easing they have been putting in place over the year. 

For the Fed, well, there is still technically still room for them to ease further, but they had signalled a pause pretty clearly recently, so it would have taken a mild disaster for them to get back off the fence and start cutting again. As it is, we go into this week's meeting with the US data holding pretty firm. Payrolls last week, admittedly distorted by the return of about 48,000 General Motors staff following strikes (see also James Knightley's detailed report)  was nonetheless, a solid set of figures. Again, more from the Fed is probable in 2020, Knightley thinks, but for this year, that's all folks. 

And then there is the ECB. This is a central bank that, like the Bank of Japan, is in my opinion, completely out of options. That won't stop people like relative newcomer and Chief Economist, Philip Lane, telling us the opposite. But like the Black Knight in Monty Python's Holy Grail, just saying, "'tis but a scratch" when your arm has been hacked off, does not make it true (you can find your own link on You Tube for this). 

Of all three of the central banks, the ECB meeting might be the most interesting from the point of view of seeing what contortions they will pull to preserve the facade of having anything to bring to the table but a bit of jawboning. But whatever is said, is unlikely to prove particularly market moving. Indeed, as the festive season unfurls, and seasonal lunches threaten to go on into the afternoon, you might well consider that extra glass of port instead of dashing back for an uneventful press conference. Your choice obviously...

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