In a week of multiple central bank meetings, Tunisia raised interest rates and Kazaksthan cut them.
But as our weekly review of world economy shows, officials from Frankfurt to Tokyo didn’t have to change monetary policy to move markets.
The lesson is that investors are watching most central banks closely for any sign they’re twisting toward tighter monetary policy.
The European Central Bank left policy unchanged, yet President Mario Draghi and colleagues dropped a pledge to increase quantitative easing if needed.
That’s a sign of increased confidence in the durability of the euro-area outlook, although Bloomberg reported the ECB’s staff is still assuming assets purchasing 30 billion euros in the fourth quarter.
Also leaving policy on hold was the Bank of Japan. Governor Haruhiko Kuroda still sought to clarify recent remarks by saying that while it may think about exiting stimulus in the 2019 fiscal year, that does not mean it will actually do so. Economists don’t see any shift this year.
The Bank of Canada indicated it’s in no rush to aggressively hike rates amid trade tensions and Poland’s Central bank extended the likely timing of a rate increase beyond this year after new economic projections.
Malaysia and Turkey also held fire.
Central bankers the world over were virtually united in signaling irritation with President Donald Trump’s decision to slap tariffs on aluminum and steel.
Trump’s decision prompted the resignation of Gary Cohn as his top economic adviser, a move that tilts the internal White House policy debate in favor of hawks who want to shrink the U.S. trade deficit with the world.