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ECB Believe That an interest rate hike at the end of 2019 is too late

Some European Central Bank management committees believe that the interest rate hike at the end of 2019 is too late
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  Bloomberg News quoted informed sources said some ECB officials believe that by the end of 2019 and then raise interest rates too late, is more likely to raise interest rates, although any decision depends on the prevailing economic prospects for next year in September or October. The euro regained its earlier decline against the dollar, rising 27 points in the short term and expecting the probability of a rate hike in September to rise to 80%.

  According to informed sources quoted by Bloomberg, some European central bank officials believe that if the market expects to raise interest rates at the end of 2019, I am afraid it will be too late. It is more likely to raise interest rates in September or October next year, but any decision will depend on the economic outlook at the time.

  The news directly pushed the euro against the dollar to rise 27 points in the short-term, hitting a high of 1.1666, completely regaining the earlier decline.

  Although the market still fully calculates the possibility that the benchmark deposit rate will increase by 10 basis points in December 2019, the probability of raising interest rates in September will increase from less than 70% to 80%.

  Wall Street has mentioned that the European Central Bank’s policy meeting in mid-June maintained the three major interest rates unchanged, announcing that it will completely close the net bond purchase project in December this year, but will keep interest rates unchanged “at least until the end of summer in 2019”.

  Although the QE volume-wide project had a definitive conclusion at the end of the project, the wording of the interest rate triggered the market doves to interpret the euro, and the euro fell more than 1% in the short-term, and the eurozone government bond yield led by German debt fell sharply.

  The ECB management committee member and Taiwan central bank Governor Vitas Vasiliauskas later said that the forward-looking guidance on interest rates should be understood as: no interest rate increase until the end of September next year, and the suspense of raising interest rates will be left to 2019 10 Policy meetings for the month and December.

  Bloomberg commented that the timing of the ECB’s interest rate hike has become more important as the QE net bond-financing timeline has no suspense. On Tuesday, ECB chief economist Peter Praet also said that interest rates will play a central role in the future major policy instruments, which means that interest rate decisions will set the tone for the European Central Bank’s monetary easing after the financial crisis.

  In addition, the European Central Bank President Mario Draghi, who is known as the “Dove”, will step down on October 31, 2019. Some analysts pointed out that the policy meeting in September or October next year will also be the last of Draghi. Window to adjust post-crisis policies.

  France Paribas economist said this week the European Central Bank also adjusted its June policy statement on interest rates commitment (rate pledge) French, German and

  It is worth noting that the yield curve of the national debt of major countries in the eurozone has also become flatter.

  According to Reuters, the two-year and 10-year German bond yield spreads fell to a one-year flat on Wednesday, to 97 basis points, 10 years and 30 years, as the European Central Bank sent a signal focused on buying long-term bonds. Bond yield spreads have narrowed by 10 basis points in the past week.

  In addition, France’s 30-year borrowing costs are close to 18 months, and the 10-year and 30-year Italian bond yield spread narrowed by 18 basis points to 74 basis points in the past week.

After The Fed’s Meeting: four interest rate hikes are expected to detonate the market

The minutes after the Fed meeting, a countdown began for four interest rate hikes which are expected to detonate the market

  The Fed will announce the minutes of the June FOMC policy meeting at 02:00 am Beijing time on Friday (July 6), and discussions on how US interest rates should rise may become the focus. Discussions about inflation may provide some clues to raising interest rates.

  The minutes of the meeting may also indicate that officials debated the growing dispute between the United States and its major trading partners, the dollar’s strength and the risk of flattening the yield curve. These concerns may curb expectations of accelerating the pace of interest rate hikes.

  At a press conference after the meeting, Fed Chairman Powell poured a cold water on the idea that policymakers can accurately measure the level of interest rate impact on the economy, and it is the key to deciding when to stop raising interest rates. But Joseph Song, a senior US economist at Bank of America, said this would not stop discussions between policymakers.

  Song said: “This is still what they are trying to estimate, but it is still an important part of the policy line. It is significant to know the scope of this expectation and whether the Fed believes it can reach this level.”

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  As the unemployment rate fell to its lowest level since 2000, the inflation rate rebounded to the 2% target, officials raised the target range of the benchmark federal funds rate to 1.75% to 2%, and announced at the meeting last month. New forecast.

  The Federal Open Market Committee raised the median forecast for a 2018 rate hike from three to four, although this situation was caused by an unidentified official changing his or her predictions. Neutral expectations have not changed and remain at 2.9%.

  Song pointed out that the minutes of the meeting “may fall back to some of the hawkish effects expected in June.”

  Whether the Fed will raise interest rates once or twice during the year is likely to depend on actual inflation data and inflation expectations. The Fed has repeatedly mentioned “symmetric” inflation targets in the past two statements, which many believe is a sign that policymakers can tolerate inflation slightly above the target.

  In May, the Fed’s annual price increase index reached 2.3%. Gus Faucher, the chief economist at PNC Financial Services Group, pointed out that although the meeting was held before the inflation data was released, Friday’s meeting minutes may provide some signals of how Fed officials will respond to higher inflation.