Friday Global Central Bank News Closing the Economic Wk March 24, 2023

Published March 24, 2022 11:29 am est
by Richard F. Cason,

Editor in Chief,
NewsMovesmarketsForex®.

Key Issues–

Friday Economic Central Bank News closes with a bang March 24, 2023 BOE Modest rate increase 0.25 bps to 4.25 percent on March 23, 2022, by MPC 7-2 vote
Swiss National Bank raised on Wednesday rates by .50 bps to 1.50% due to inflationary concerns looming over the 2.00% mandate currently at 3.4% escalated by rising electricity and food
U.S. Federal Reverse FOMC increase interest rates by 0.25 bases point to 4.25%, still fighting persistent inflationary concerns
U.S. Banking Crises in Tech Sector Quailed with Federal Reserve adding need liquidity through the implementation of the New Banking Term Funding Program
Labor market has been tight however in the short term GDP and employment are likely to be somewhat stronger than expected
Euro Zone Energy price inflation continue to decline anchored by lower wholesale gas prices
Euro Zone Wage growth in the Euro area has continued to increase as well

Inflationary pressures have been a growing concern around world ending this high impact Central Bank global currency news moving economic events. Many countries are experiencing rising inflation rates due to a combination of factors, including supply chain disruptions, higher commodity prices, and pent-up demand as economies reopen after the pandemic.

In the United States, inflation has been on the rise, with the consumer price index (CPI) increasing by 6.2% in October 2022, currently reduce a tick down to 5.99%, the highest level since 1990. The Federal Reserve has been closely monitoring inflation and has signaled that it may raise interest rates if inflation continues to rise.

Similarly, in the Eurozone, inflation has been increasing, with the CPI rising by 4.1% in October 2022, the highest level in a decade. The European Central Bank has also been closely monitoring inflation and has signaled that it may adjust its monetary policy if necessary.

In China, rising inflation has also been a concern, with the CPI increasing by 1.5% in October 2022. The government has implemented various measures to control inflation, including tightening monetary policy and increasing the supply of key commodities.

Inflationary pressures are a global concern and can have significant impacts on economies and businesses around the world. It is important for governments and central banks to monitor inflation and take appropriate measures to control it before it leads to further economic disruptions.

As the world enters the first quarter of 2023, global economic news has been dominated by a mix of positive and negative developments. While some countries are experiencing economic growth, others continue to struggle with the effects of the COVID-19 pandemic. Here are some of the top global economic news stories from March 2023:

United States Economy: The U.S. economy has continued to grow at a steady pace in 2023, with strong consumer spending and business investment. The Federal Reserve has maintained its accommodative monetary policy, keeping interest rates low to support economic growth. However, inflation has been on the rise, which has raised concerns about the possibility of the Fed tightening monetary policy to control inflation. The Biden administration $2 trillion infrastructure plan, which has proven to have stimulated the U.S. economy in very positive way.

China Economy: China’s economy has rebounded strongly from the pandemic, with GDP growth expected to reach 8.5% in 2023. The country’s manufacturing and export sectors have been driving the growth, but there are concerns about rising debt levels and the government’s crackdown on tech companies. The recent crisis in the Evergrande Group, one of China’s largest property developers, has also raised fears about a potential contagion effect on the broader economy.

Europe Economy: Europe’s economy has been struggling to recover from the pandemic, with growth expected to be slow in 2023. The European Central Bank has continued to provide monetary stimulus, but there are concerns about rising inflation and the possibility of tightening monetary policy. The ongoing Brexit negotiations have also added uncertainty to the region’s economic outlook.

Emerging Markets: Emerging markets have been mixed in their performance in 2023. India’s economy has been growing at a strong pace, but the country has been hit hard by a surge in COVID-19 cases. Brazil’s economy has been recovering slowly, but the country’s political instability and high debt levels remain a concern. Russia’s economy has been benefiting from high oil prices, but the country’s geopolitical tensions with the West have added uncertainty to its economic outlook.

Global Supply Chain Disruptions: The pandemic has led to major disruptions in global supply chains, which have had ripple effects on economies around the world. The shortage of semiconductors, for example, has led to production slowdowns in the automotive industry, which has had knock-on effects on other industries. The recent outbreak of the Omicron variant of COVID-19 has also raised concerns about further disruptions to global supply chains.

Climate Change and the Economy: Climate change has been an increasingly pressing concern for the global economy, with extreme weather events and rising sea levels posing risks to businesses and economies. The United Nations Climate Change Conference, which took place in Glasgow in November 2022, resulted in a number of commitments from countries to reduce carbon emissions. However, there are concerns about the economic costs of transitioning to a low-carbon economy.

The global economic news for the week of March 24 2023 has been a mixed bag of Central Bank related currency moving events that have some countries experiencing growth while others continue to struggle with the effects of the pandemic. The ongoing uncertainties around the pandemic, supply chain disruptions, and climate change continue to pose risks to the global economy. However, the efforts of governments and central banks to support economic growth, coupled with the potential for technological advancements and the development of green industries, provide some cause for optimism

Expert Central Bank Analysist by World Renown ADM Investor Services International Chief Economist Marc Ostwald

Marc Ostwald who is an expert Chief Economist & Global Strategist with ADM Investor Services International head quartered in London England, gives his insights and opinion on this weeks global central banks economic recap news events, Mr. Ostwald eloquently stated that:

EVENTS PREVIEW

‘The week ends with a relatively busy schedule of statistics, with G7 ‘flash’ PMIs, UK GfK Consumer Confidence and Retail Sales and US Durable Goods Orders providing the headlights, while a gaggle of ECB, Fed and BoE speakers feature on the events schedule.

In terms of the latter the focus will be on their messaging in the wake of all delivering expected rate hikes, seemingly confirming that they see no trade-off between fighting inflation and financial stability concerns.

But market rate expectations have shifted sharply, with the Fed now expected to have cut rates by nearly 100 bps by the end of 2023, the ECB seen hiking rates just once more this year, while the BoE is expected to hike rates once more, but to reverse this by year end (see charts).

A degree of calm has returned to equity markets, while the widening in credit spreads has been halted, but remains substantially wider than prior to the SVB collapse – per se risk appetite has stabilized, in no small part helped by Fed liquidity provisioning. Yesterday’s weekly Fed Balance Sheet report (see table and chart) saw a further rebound of $100Bbln, bringing the total increase in the past fortnight to $400 Bln, in effect reversing 60% of the QT reduction.

In the detail, the take-up of the Bank Term Funding Program rose sharply to $53.66 Bln vs prior week $11.9 Bln, and mirrored effectively by a $42 Bln reduction in Discount Window borrowing, though this remains very high at $110.2 Bln (vs. just 4.6 Bln a month ago).

It is worth noting that for all the volatility above all in rates, that there has been, overall US financial conditions have in fact been entrenched in a well-defined range (see chart) since the end of November, underlining that this has not been a broad systemic crisis, but rather a shift in where assets are held, with money market funds and GSIBs seeing substantial inflows, while regional banks witnessed outflows; counterparty risk remains high on agenda.

It should be added that flows are one thing, but do not offer any specific detail on how much lending standards have tightened. On balance, it remains the case that overall excess liquidity remains high, but market liquidity remains thin, and volatility on a knife edge, i.e. still just another negative headline or rumour away from a reignition of fear.

G7 flash PMIs are forecast to see a modest improvement in Manufacturing, albeit still mostly contracting, and a slight setback in most Services readings after some modest strength in February. Souring Gas prices Much may depend on data collection timing, given some risk of contagion effects to non-financial sentiment from the ‘banking crisis’. Prices sub-indices will require particular monitoring, given the easing in both oil and gas prices.

U.K. data overnight saw an as expected pick-up in Gfk Consumer Confidence to a still very down at heel -36 from -38, paced by economy expectations (-62 vs. -65) and Major Purchases Climate (-33 vs. -37), though notably seeing a renewed dip in Personal Finances Expectations (-21 vs. -18). By contrast Retail Sales were much stronger than expected at 1.2% m/m, with an upward revision to January to 0.9% from 0.5%, with notable strength in Food (0.9% m/m), Non-specialized Stores (5.5% m/m, boosted above all by Discount Stores) and a 2.9% m/m rebound in Clothing & Footwear. As with the US, UK consumer spending is showing some resilience despite cost of living pressures, though the strength in discount store sales underlines that challenges clearly remain.

US Durable Goods Orders are forecast to rise a tepid 0.2% m/m both on headline and the core CapEx proxy Non-defence Capital Goods ex Aircraft, the latter slowing from 0.8% in January, and predicated on ISM Manufacturing Orders (47.0 vs. Jan 42.8) remaining weak, and suggesting unsurprising caution on the sector CapEx outlook. But with banking concerns still very much at the forefront of market concerns, this will have to spring a surprise to have anything more than a passing impact”.

“Busier un of data as markets tentatively stabilize: focus on PMIs,
UK GfK survey and Retail Sales, US Durable Goods, Brazil IPCA-15
inflation and Canada Retail Sales; ECB, Fed and BoE speakers

– UK: GfK picks up, but more a case of less pessimism than optimism,
Retail Sales strength underlines resilience message, though discount
store strength highlight ongoing cost of living challenges

– US Durable Goods seen posting marginal gain, as businesses remain
cautious on Cap Ex outlook

– USA: high level of Fed discount window borrowing, jump in BFTP usage
reverses much of Fed QT, underlines fragility and counterparty risk
concerns

– Attachments: Fed, ECB and BoE rate expectations by meeting; Fed Balance
sheet chart and weekly statement; US IG and HY Credit spreads; US Senior
Financials average credit spreads: US Financial Market Conditions”

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