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For a full diversity of central bank responses to a once-in-a-generation global inflation shock, look no further than Thursday’s crop of decisions around Europe.
Within a few hours on the day after the U.S. Federal Reserve’s announcement of an accelerated stimulus wind-down, six monetary authorities around the region will each deliver a distinctive take on the different threats posed by surging consumer prices and the omicron variant.
The spectrum of action may range from another aggressive weekly interest-rate increase in Hungary to yet more orthodoxy-defying easing in Turkey.
Norway is also likely to hike, the Bank of England could delay liftoff again, and the European Central Bank will try to exit emergency stimulus without tightening. The Swiss may emerge least ruffled by inflation, shielded by a strengthening currency.
Here’s a closer look at the last big day this year of scheduled monetary action for most of the region.
Switzerland
- 9:30 a.m. in Zurich (8:30 a.m. U.K. time)
- -0.75% deposit rate
- Press conference at 10 a.m.
The Swiss National Bank is all but sure to stick with the world’s lowest rates, at -0.75%. After the franc climbed through what was once considered a key line in the sand to 1.04 per euro this month with little sign of concern from officials, investors will be closely watching if the central bank still insists on describing the currency as “highly d.”
Hungary
- 9:30 a.m. in Budapest (8:30 a.m. U.K. time)
- 3.3% 1-week rate
- No press conference scheduled
Facing the highest inflation since 2007, Hungary’s central bank plans to raise the effective base rate by 30 basis points to 3.6% for a fifth consecutive weekly increase. Policy makers, who shut down their quantitative-easing programs this week, have flagged a “long” monetary tightening campaign extending into next year that coincides with rapidly climbing borrowing costs in regional peers the Czech Republic and Poland.
Norway
- 10 a.m. in Oslo (9 a.m. U.K. time)
- 0.25% deposit rate
- Press conference at 10:30 a.m.
- Follow our TOPLive blog on the terminal
A hike by Norway’s central bank has been flagged for months. Norges Bank will probably carry out that plan and deliver another rate increase, though renewed coronavirus restrictions have suddenly made the decision much more finely balanced.
Turkey
- 2 p.m. in Ankara (11 a.m. U.K. time)
- 15% benchmark rate
- No press conference scheduled
Turkey’s central bank will meet to decide whether to halt easing or further lower the benchmark as demanded by President Recep Tayyip Erdogan, who is looking to spur growth and create jobs to rebuild his flagging popularity. The president’s low-rates experiment has come at the expense of higher inflation and a weaker lira, which has lost almost half of its against the dollar this year, the most among major currencies globally.
U.K.
- 12 noon in London
- 0.1% policy rate
- No press conference scheduled
- Follow our TOPLive blog on the terminal
The BOE surprised investors by not lifting rates last month. A surge in coronavirus cases linked to omicron has convinced economists that a move this week is also unlikely, though news on Wednesday that inflation reached 5.1%, more than double the target, has left investors on edge. Officials face pressure to tighten policy soon, not least after the International Monetary Fund cautioned them against “inaction bias.”
Read more: Delayed U.K. Rates Lift-Off May Trigger Faster Rises Later
Euro Region
- 1:45 p.m. in Frankfurt (12:45 p.m. U.K. time)
- -0.5% deposit rate
- Press conference at 2:30 p.m.
- Follow our TOPLive blog on the terminal
While ECB President Christine Lagarde and her colleagues will probably confirm their pandemic bond-buying program will expire in March, they are also considering whether to cushion that exit by boosting regular purchases, and how to respond to future market shocks. Officials will publish new economic projections framing their discussion at a time when inflation is running at the fastest pace since the creation of the euro.
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