At Any Rate Global Rates: Hawkish cuts and dovish holds
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Dec 20, 2024 Francis Diamond, Head of European Rate Strategy at J.P. Morgan, shares insights alongside colleague Jay Barry. They discuss the recent decisions by the Federal Reserve and Bank of England, highlighting their contrasting stances. The complexities of interest rate dynamics in the UK and US are dissected. They delve into the Bank of England's new liquidity policies and the Federal Reserve's challenges with funding volatility. Additionally, the looming government funding concerns and potential debt ceiling implications are emphasized, showcasing the uncertainty in the markets.
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Central Bank Actions
- The Fed cut rates but gave hawkish guidance, surprising markets.
- The Bank of England held rates but hinted at dovish future actions.
Bank of England Decision
- The Bank of England (BOE) maintained its rate, despite three members dissenting and voting for a cut.
- The BOE acknowledges slowing growth but remains concerned about sticky inflation.
Fed's Hawkish Stance
- The Fed's rate cut and projections were more hawkish than anticipated, leading to market repricing.
- Four participants even saw no need for the cut, signaling a potential earlier pause in easing.