Central Bank Policy Watch September 2023:

Central Bank Policy Watch September 2023:

The United States' Federal Reserve, the Swiss National Bank, Sweden's Riksbank, South Africa's Reserve Bank, the European Central Bank and the Bank of England all made monetary policy decisions in September. The Bank of Canada made a statement.

The Federal Reserve, Swiss National Bank, Bank of England and South Africa Reserve Bank all opted to hold benchmark rates steady with the Riksbank raising policy rates in line with forecasts. The ECB also rose it's benchmark rates by 25 basis points.

Core Inflation is steady, however headline Inflation is expected to be impacted by higher oil prices as Brent Futures closed at above $93/barrel on Friday September 21.

The Federal Reserve and the Swiss National Bank expressed willingness to act (or intervene in the market) should economic conditions (inflation, exchange rate stability) call for it.

Whether these institutions would act on the increased energy prices - that are bound to feed through to the consumer should the current Crude Oil Prices persist - wasn't deduced from the individual statements of each Central Bank Chiefs, but a general tone was that interest rates will stay higher for longer.

According to the Financial Post, the BOC will hold its key rates near the current level of five per cent until the third quarter of 2024, economists say, with growth picking up momentum to end this year.


Federal Reserve.

Benchmark Rate: 5.25-5.50%
Swiss National Bank:
Benchmark rate: 1.75%
Inflation: 2.2% (2023 forecast.)

Note:
Inflation forecast for 2024 is 1.9%. The SNB sees inflation at the edge of price stability, but prepared to intervene (in the currency market) if need be.


Riksbank.

Benchmark rate: 4%
Note:

Sweden Riksbank raising policy rates to 4%. This was exactly in line with forecasts.


Bank of England.

Benchmark rate: 5.25%

Note:
BoE held its benchmark rate at 5.25% against the markets expectations of 25 bps to 5.50%.


South Africa Reserve Bank.

Benchmark Rate: 8.25%
South Africa held its benchmark rate for the second time as inflation risks persists.


European Central Bank.

Benchmark rates:
 • Main Refinancing Operations rate: 4.50%
 • Marginal Lending Facility Rate: 4.75%
 • Deposit Facilty rate: 4%

Note:

The ECB rose all three key interest rates by 25 basis points, signaling an end to the hiking cycle but stated that it expects inflation to come down more slowly to it target of 2%.

Macroeconomic projections for the Euro-Area sees inflation averaging 5.6% for 2023, 3.2% in 2024, and 2.1% in 2025. 

This was reported in the Bank's statement as an upward revision for 2023 and 2024 as a result of higher energy prices than was previously priced in.

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