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Financial Expertise

Finance Talk: markets turn their attention to central banks

Financial Expertise

Finance Talk: markets turn their attention to central banks

These days, central banks are once again leading the headlines. While no big moves are expected in Europe, the pressure for rate hikes in emerging markets is high. Find out more in our interview with David Kohl, Head of Currency Research and Deputy Chief Economist at Julius Baer.

Key takeaways:

European Central Bank (ECB): “The economic data are good enough so that the ECB can proceed with its policy and end the asset purchasing program. However, the economic backdrop is not solid enough to raise interest rates in the short term. We will find out more in the ECB meeting on Thursday, 13 September.”

Bank of England (BoE): “The BoE meeting is also on Thursday. The big question is whether the bank did something wrong in last August when it hiked rates. We don’t think so. The economic situation is comparable to that of the eurozone. The economic data are ok and inflation is coming down, with core inflation at 1.9%, which is within the target range of the BoE. Also here, we don’t expect a rate hike anytime soon.”

Central Bank of Turkey (CBRT): “The Turkish central bank is under intense pressure to hike rates in order to stop the depreciation of the Turkish Lira. There is some speculation about a rate hike of 500 basis points. It could be more, it could be less. Such a move would help the CBRT to prove its independence from political interference and regain its credibility.”

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