The Ukraine crisis may be moderating the most aggressive rate hike forecasts, but New Zealand’s recent interest rate hike implies central banks are still committed to tightening policy.
The Reserve Bank of New Zealand raised interest rates for the third time in a row on Wednesday, bringing key policy rates to 1%. It also hinted at a more aggressive tightening strategy to combat inflation, sending the New Zealand currency to a one-month high.
It also indicated plans to sell off its bond assets worth NZ$50 billion ($33.82 billion). find out more
Other central bank officials made it obvious that rate hikes were on their thoughts as well.
On Tuesday, Bank of England deputy governor Dave Ramsden indicated he anticipated more tightening in the future, while ECB policymaker Robert Holzmann was quoted this morning as stating the ECB could boost rates in the summer before finishing its bond-buying programme.
Still, tensions between the West and Russia over Ukraine cloud the policy picture, particularly at the European Central Bank. The decision by Germany to postpone Nord Stream 2 certification sent European natural gas markets soaring.
The geopolitical tensions may result in increased upward pressure inflation.
For the time being, markets remain more stable as investors await new news. Asian market futures have firmed overnight, but European and US stock futures have remained stable.
On the earnings front, British bank Barclays reported a nearly trebling in annual profit as bad loan charges fell and its investment bank maintained its good recent performance.
Still, the policy landscape is clouded by tensions between the West and Russia over Ukraine, particularly at the European Central Bank. Germany’s decision to postpone certification of Nord Stream 2 sent European natural gas markets skyrocketing.
Increased upward pressure inflation could be a result of geopolitical concerns.
Markets are currently more stable as investors await more information. Overnight, Asian stock futures firmed, but European and US stock futures stayed flat.
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