Analyzing RBA Policy Signals, Fed and ECB Chatter

  • Monday, October 2, 2017

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The Most Important Central Bank Releases This Week
central bank communications analytics research

After several busy weeks of speeches, central bankers are showing only slight signs of slowing down. Eight Fed policymakers will be speaking this week, including Yellen, Dudley, and Williams. These speeches are likely to continue the slightly hawkish rhetoric we have seen from the Fed over the last few weeks. Conversely, ECB policymakers have continued their somewhat dovish trend despite strengthening growth and employment figures. With tapering policy on the horizon, the ECB account of the September monetary policy meeting released this week will likely reflect improving fundamentals, despite persistently low inflation depressing sentiment.

The BOE is facing a mirror image of the ECB’s conundrum as the data increasingly indicates a stagflationary situation. Above-target inflation suggests policymakers may move to hike rates soon, but weak growth has kept sentiment from rising. This week’s BOE minutes are likely to indicate a rate hike is on the horizon, but perhaps not imminent. Like the BOE, the only BOC policymaker speech this week could similarly suggest that a hike is on the horizon, but likely not imminent considering the BOC has hiked rates at each of the bank’s last two policy meetings.

In the lone policy meeting this week, RBA policymakers are likely to hold rates despite rapidly rising hawkish sentiment over the last couple months. While policymakers continue to express concern about upside risks of a real estate bubble, downside risks tied to financial stability and soft commodity prices are likely to keep the RBA on hold for the time being, even as they begin signalling tighter policy is coming soon.

This is an abbreviated version of the Cyborg Analyst. The full weekly report contains detailed analysis based on Prattle’s central bank data. Subscribe here.

The Prattle Team

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