Autumn made a hasty arrival to Europe in mid-September and it was accompanied by a multitude of monetary policy meetings. The current tightening cycle has seen plenty of interest rate hikes. But this new round of meetings show how central banks appear undecided on their next steps in light of the mixed signals coming from their economies. What will this cautious stance from central banks mean for the world’s economies?
“Markets have not priced in the risks related to the credit cycle, volatility in inflation figures (to the upside and downside), and any kind of landing for the US economy. We maintain our quality bias.”
Much less fiscal policy support will likely constrain domestic demand and higher-for-longer interest rates will make monetary policy even more restrictive.