Tag Archives: Interest rates

ECB policy rates will remain “at present or lower levels for an extended period of time”. Another deposit rate cut, to -0.40% or even lower, looks likely to be part of the ECB’s toolkit, especially if the Fed turns more cautious in the meantime. The ECB left all policy settings unchanged at today’s meeting, as widely expected. At the same time, the overall tone of the press conference reflected yet another significant dovish shift in the ECB’s communication – one that the Governing...

Enough talk already. The moment is finally here: The Federal Reserve raised interest rates today by 0.25 percent for the first time since June 2006. Credit Suisse doesn’t believe the small, well-anticipated hike will hurt the U.S. economy in and of itself. (What happens in rate-sensitive markets, especially high-yield bonds, is another story, and one that The Financialist will cover in the coming days.) More important to financial markets are the signals Federal Reserve Chair Janet Yellen...

December could be a big month for central bankers. The Federal Reserve is expected to make its first rate hike in nine years on December 16, while the European Central Bank is expected to announce further easing measures on December 3. The Swiss National Bank is likely to follow the ECB’s footsteps, sending deposit rates in the country even further into negative territory. Those moves, particularly combined with the divergence from American monetary policy, should provide a boost to European...

It’s not an easy time to be a fixed-income investor, particularly for those seeking opportunities in the United States. The Federal Reserve’s stated intention to raise benchmark interest rates this year for the first time since 2006 hangs over the U.S. fixed-income market like a pall, threatening to drive bond prices down, introduce volatility, and even create a liquidity crunch. Investors who want (or need) to maintain exposure to fixed income through the rate hike might try looking across...

Our monetary system is failing, but explaining that isn’t easy. The most popular argument is that the dollar has falling purchasing power and rising inflation. The problem with this argument is that consumer prices aren’t skyrocketing now. So, of course, people remain skeptical. Yields across all markets were falling worldwide. This causes the income generated from assets to fall. I wrote about this serious problem last time, introducing the concept of yield purchasing power—which is how...