ECB and BoE refuse to join the Fed’s dovish stance; euro, sterling rally | MarketTalk: What’s up today? | Swissquote

Show notes

The European Central Bank (ECB) and the Bank of England (BoE) refused to join the Federal Reserve (Fed)-thrown pivot party. Both Christine Lagarde and Andrew Bailey declined to discuss cutting interest rates judging a policy loosening too early as the inflation threat looms. BoE’s Bailey pointed at the possibility of another rate hike, as three MPC members favoured hiking rates, while the ECB announced to accelerate EXIT from the PEPP stimulus, and the Norges Bank popped up with a surprise rate hike.
As a result, the rally in global stock and bond markets slowed. The euro and sterling rallied.
Note that the contrast between the resilient US economy adopting a dovish stance and faltering European economies holding on to a hawkish position gives the impression that something is amiss. Therefore, this week certainly threw the foundation of a stronger euro and sterling against the US dollar but the medium-term potential could be limited.
Elsewhere, the People’s Bank of China (PBoC) announced the largest to date liquidity injection to date, the latter could barely boost appetite in Chinese stocks but the industrial metals could be a good play in the context of increased Chinese stimulus.
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