Central banks frustrated, commodities directionless trade

Central banks frustrated, commodities directionless trade

The key events this week was the meetings of the Central banks. Such as the US Federal Reserve, the Bank of Japan, and the Bank of England. But the lack of indications from them has led to uncertainty in financial markets.

The US dollar index rose after the Fed meeting but failed to capture profits. As it focused on other central banks. U.S. equity markets came under pressure after four days of gains as trumped the central bank’s evil stance by inflicting losses on the global economy.

US Federal Reserve

The Fed did not change monetary policy in line with expectations. The Fed has highlighted that interest rates could remain close to current levels until at least 2023. The central bank is uncertain about the US economic outlook as the spread of the virus has not been brought under control.

The Fed has largely maintained its stance, but market players were disappointed when the central banks reiterated the need for additional economic stimulus to support the economy. Priority for economic policy indicates that the central banks have limited monetary policy tools. A high level of determination to use them. So the Fed has not considered any new measures and is looking for a new economic stimulus. U.S. policymakers, however, are struggling to reach a consensus on the new package.

The Bank of England (BOE)

The Bank of England (BOE) has expressed concern about the economy amid Brexit uncertainty and growing viral cases. This indicates that it is looking at negative interest rates. However, Boe did not change the interest rate and bond purchases and did not give clear indications about its next course of action.

The Bank of Japan (BoJ)

The Bank of Japan (BoJ) has also not changed monetary policy and is more optimistic about the economy, while the overall outlook remains rocky. However, BoJ said, it would work with the new administration under the leadership of Yoshihide Suga. He wants to continue aggressive monetary and economic measures to boost growth.

Despite the market focus on these major central banks, uncertainty is evident at other monetary policy meetings as well.

The Brazilian central bank has not changed interest rates after nine consecutive cuts, but will not reduce monetary stimulus unless inflation begins to warm.

As a result of the split, the Reserve Bank of South Africa also decided to suspend interest rates, waiting for further clarification on the virus situation.

Indonesia did not change its interest rate for the second month in a row, emphasizing that quantitative easing is a good way to support the economy.

Overall, central banks are cautious about the economic outlook due to ongoing virus risks and want to continue with the monetary policy. However, fresh action may not be taken unless there are fresh challenges.

If global economic activity is rising and recovery mistakes are not apparent, central banks may choose to seize their ground.

Disclaimer :
The above report compiled from information available on public platforms. Stock investor advises users to check with certified experts before taking any investment decisions.

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