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Tag: Central banking

  • A crunch week for central banks will put rate-cut expectations to the test

    A crunch week for central banks will put rate-cut expectations to the test

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    Fed Chairman Jerome Powell prepares to deliver remarks to the The Federal Reserve’s Division of Research and Statistics Centennial Conference on November 08, 2023 in Washington, DC. 

    Chip Somodevilla | Getty Images

    A flurry of major central banks are set to make their final rate decisions of the year in a crunch week that will test market bets for rate cuts in early 2024.

    The U.S. Federal Reserve on Wednesday will kick off what is poised to be a pivotal week, followed by a “Super Thursday” when the European Central Bank, Bank of England, Swiss National Bank and Norway’s Norges Bank will all meet.

    Policymakers at the central banks are broadly expected to hold interest rates steady, except for Norway’s central bank which warned it would likely raise the cost of borrowing in December.

    Investors will be searching for clues in the banks’ statements on when rate cutting could start next year as inflation continues to fall away from its highest level in decades.

    “The biggest risk to ‘risk-on’ is the fact that the Fed does not do what the market is telling it that it is going to do, which is slash interest rates over the course of 2024,” David Neuhauser, chief investment officer of Livermore Partners hedge fund, told CNBC’s “Squawk Box Europe” on Monday.

    “The market is telling you one thing, so what the market is doing essentially is calling out the Fed’s credibility … and we’ll see who’s right here.”

    Rate cuts ahead?

    Market participants overwhelmingly expect the Fed to hold rates at 5.25%-5.50%, although traders are pricing in a 25 basis point cut as early as March next year, according to the CME FedWatch Tool.

    The Fed has sought to push back on market expectations for aggressive rate reductions next year, however.

    Fed Chairman Jerome Powell warned earlier this month that it would be “premature” to speculate when policy might ease and suggested the central bank would be “prepared to tighten policy if it becomes appropriate to do so.”

    Livermore Partners’ Neuhauser said the high market expectations for rate cuts contrast with Powell’s recent commentary.

    “There’s two different dynamics at play: what the market is telling you, and what Federal Reserve Chairman Powell is telling you, let’s see who has the credibility this time,” Neuhauser said.

    Powell has also noted that policy is currently “well into restrictive territory” and said the balance of risks between doing too much or too little were close to balanced.

    “When we think about the Fed moving into next year, we think it makes sense that they are on the lookout for when and how much to reduce rates,” Sam Zief, head of global FX strategy at J.P. Morgan Private Bank, told CNBC’s “Street Signs Europe” on Monday.

    “As their policy rate is so restrictive, as the unemployment rate gets closer to neutral, as inflation gets closer to neutral, their policy rate should do the same. The real question is: what is the pace of that?”

    The Marriner S. Eccles Federal Reserve building during a renovation in Washington, DC, US, on Tuesday, Oct. 24, 2023.

    Valerie Plesch| Bloomberg | Getty Images

    Ahead of the Fed’s meeting Wednesday, Zief said market participants should be prepared to be slightly disappointed by a lack of clarity over the pace and scale of further interest rate changes.

    “Our base case is actually that the Fed isn’t going to say all of that much. The dots probably don’t move all that much. The statement probably doesn’t change all that much,” he added.

    The Fed’s approaching rate decision comes shortly after U.S. job creation showed little sign of abating in November. Nonfarm payrolls grew by a seasonally adjusted 199,000 for the month, beating expectations of 190,000, while the unemployment rate dipped to 3.7%, compared with the forecast for 3.9%.

    Economists said at the time that the economic data appeared to reflect a job market that continues to be resilient even after a year of dodging recession fears.

    What about the ECB?

    Major banks elsewhere are set to follow in the Fed’s footsteps with their final respective policy statements on Thursday.

    Investors will be closely monitoring the ECB’s meeting for any sign the central bank is poised to impose swift rate cuts in 2024. Euro zone inflation, which exceeded 10% last year, came in at 2.4% in November, reflecting its lowest level in more than two years.

    Price rises have dropped quickly toward the ECB’s target levels of 2% in recent months, fueling investor bets for rate cuts early next year.

    Christine Lagarde, president of the European Central Bank (ECB), at a rates decision news conference in Frankfurt, Germany, on Thursday, Sept. 14, 2023. The ECB raised interest rates again, acting for the 10th consecutive time to choke inflation out of the euro zone’s increasingly feeble economy.

    Bloomberg | Bloomberg | Getty Images

    Policymakers have cautioned investors, however, that the “last mile” of tackling disinflation could be the hardest — and it may take twice as long as the battle to get inflation back under 3%.

    Economists at Deutsche Bank said in a research note published earlier this month that it was once again bringing forward the timing of the first ECB rate cut to April, citing the latest inflation data and the tone of official commentary. It added that there is also a “significant risk” of a rate cut as soon as March.

    “We fear we were too timid,” economists at Deutsche Bank said on Dec. 6. “The risk is now earlier and larger cuts, and an ECB more capable of decoupling from the Fed.”

    Economists at Pantheon Macroeconomics have said that while the consensus now expects the first ECB rate cut in June next year, “we still believe March is a good bet.”

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  • The Federal Reserve could achieve a soft landing after all. Here's what that would mean for you

    The Federal Reserve could achieve a soft landing after all. Here's what that would mean for you

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    The Federal Reserve is expected to announce it will leave rates unchanged at the end of its two-day meeting this week after recent signs the economy is in fairly good shape and as inflation continues to drift lower.

    “While there’s been talk about an imminent recession going back to early last year, the U.S. economy has remained substantially more resilient than expected,” said Mark Hamrick, senior economic analyst at Bankrate. 

    “A soft landing appears to be the greatest likelihood for next year,” he said. However, the economy isn’t out of the woods just yet, Hamrick added, and “a mild and short recession can’t totally be ruled out.”

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    Even though inflation is still above the central bank’s 2% target, markets have already been pricing in the likelihood that the Fed is done raising interest rates this cycle and is now looking toward potential rate cuts in 2024.

    For consumers, that means relief from high borrowing costs — particularly for mortgages, credit cards and auto loans — may finally be on the way as long as inflation data continues to cooperate.

    And yet, “continued slowing in inflation doesn’t mean price decreases, it means a price leveling,” said Columbia Business School economics professor Brett House.

    Hope for a ‘softish’ landing

    If the central bank can continue to make progress toward its 2% target without bringing the economy to a more abrupt slowdown, there is the possibility of achieving the sought-after “Goldilocks” scenario.

    In that case, the economy would grow enough to avoid a recession and a negative hit to the labor market, but not so strongly that it fuels inflation.

    For consumers, that means “we are likely to see interest rates come down slowly and growth to remain relatively robust and we are likely to see the jobs market remain relatively strong,” House said.

    For some, that expectation may be too optimistic.

    “While we also expect a softish landing, the pace of the recent rally in stocks and bonds looks unlikely to be sustained,” Solita Marcelli, UBS Global Wealth Management’s chief investment officer Americas, wrote in a recent note.

    “Equity markets are already pricing in plenty of good news, pointing to an unrealistic level of confidence from stock investors,” Marcelli said.

    Markets are now even showing a roughly 13% chance of a rate cut as early as January, according to the UBS note.

    Fears of a hard landing

    Central bank policymakers, however, won’t cut for the sake of cutting. More likely, that kind of policy easing would be in response to a sharply slowing economy and rising unemployment, neither of which would be good news for most Americans.

    “Aggressive rate cutting cycle would be a sign of deep worry that we are heading toward a hard landing,” House said. That has negative implications for the labor market and, therefore, consumers. “The most important determinant of household finances is whether people have a job or not,” House said.

    And economists still haven’t ruled out a recession in the second half of 2024.

    The job market already shows signs of slowing. While the unemployment rate declined to 3.7%, the Labor Department reported that job openings also fell to 8.73 million in October, the lowest level since March 2021.

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  • Market vulnerabilities and a possible U.S. recession: Strategists give their cautious predictions for 2024

    Market vulnerabilities and a possible U.S. recession: Strategists give their cautious predictions for 2024

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    A security guard at the New York Stock Exchange (NYSE) in New York, US, on Tuesday, March 28, 2023.

    Victor J. Blue | Bloomberg | Getty Images

    With central banks having hiked interest rates at breakneck speed and those rates likely to stay higher for longer while the lagged effects set in, the macroeconomic outlook for 2024 is far from clear.

    The International Monetary Fund baseline forecast is for it to slow from 3.5% in 2022 to 3% in 2023 and 2.9% in 2024, well below the historical average of 3.8% between 2000 and 2019, led by a marked slowdown in advanced economies.

    The Washington-based institution sees U.S. GDP growth, which has remained surprisingly resilient in the face of over 500 basis points of interest rate hikes since March 2022, to remain among the strongest developed market performers at 2.1% this year and 1.5% next year.

    The U.S. economy’s resilience has fueled an emerging consensus that the Federal Reserve will achieve its desired “soft landing,” slowing inflation without tipping the economy into recession.

    The market is now largely pricing a peak at the current Fed funds target range of 5.25-5.5%, with interest rate cuts to come next year.

    Yet Deutsche Bank‘s economists, in a 2024 outlook report published Monday, were quick to point out that monetary policy operates with lags that are “highly uncertain in their timing and impact.”

    “With the lagged impact of rate hikes taking effect, we can already see clear signs of data softening. In the U.S., the most recent jobs report showed the highest unemployment rate since January 2022, credit card delinquencies are at 12-year highs, and high yield defaults are comfortably off the lows,” Deutsche’s Head of Global Economics and Thematic Research, Jim Reid, and Group Chief Economist David Folkerts-Landau said in the report.

    “At the outer edges of the economy there is obvious stress that is likely to spread in 2024 with rates at these levels. In the Euro Area, Q3 saw a -0.1% decline in GDP, with the economy in a period of stagnation since Autumn 2022 that will likely extend to mid-Summer 2024.”

    The German lender has a considerably bleaker prognosis than market consensus, projecting that Canada will have the highest GDP growth among the G7 in 2024 at just 0.8%.

    “Although that is still positive and the profile improves through the year, it means the major economies will be more vulnerable to a shock as they work through the lag of this most aggressive hiking cycle for at least four decades,” Reid and Folkerts-Landau said, noting that potential “macro accidents” would be more likely in the aftermath of such rapid tightening.

    “We had 10-15 years of zero/negative rates, plus an increase in global central bank balance sheets from around $5 to $30 trillion at the recent peak, and it was only a couple of years ago that most expected ultra-loose policy for much of this decade. So it’s easy to see how bad levered investments could have been made that would be vulnerable to this higher rate regime.”

    U.S. regional banks triggered global market panic earlier this year when Silicon Valley Bank and several others collapsed, and Deutsche Bank suggested that some vulnerabilities remain in that sector, along with commercial real estate and private markets, creating “a bit of a race against time.”

    ‘Higher for longer’ and regional divergence

    The prospect of “higher for longer” interest rates has dominated the market outlook in recent months, and Goldman Sachs Asset Management economists believe the Fed is unlikely to consider cutting rates next year unless growth slows by substantially more than current projections.

    In the euro zone, weaker growth momentum and a large drag from tighter fiscal policy and lending conditions increase the likelihood that the European Central Bank pauses its monetary policy tightening and potentially pivots toward cuts in the second half of 2024.

    “While the Fed and ECB seem to have steered away from a hard landing path during the tightening cycle, exogenous shocks or a premature pivot to policy easing may reignite inflation in a way that requires a recession to force it lower,” GSAM economists said.

    “Conversely, further monetary tightening might trigger a downturn just as the effects of prior tightening begin to take hold.”

    CEO explains why economies are still 'relatively resilient' to interest rate rises

    GSAM also noted regional divergence in the trajectory of growth prospects and inflation patterns, with Japan’s economy surprising positively on the back of resurgent domestic demand driving wage growth and inflation after many years of stagnation, while China’s property market indebtedness and demographic headwinds skew its risks to the downside.

    Meanwhile Brazil, Chile, Hungary, Mexico, Peru and Poland were early hikers of interest rates in emerging markets and were among the first to see inflation slow sharply, meaning their central banks have either begun cutting rates or are close to doing so.

    “In a desynchronized global cycle, with higher-for-longer rates and slower growth in most advanced economies, the road ahead remains uncertain,” GSAM said, adding that this calls for a “diversified and risk conscious investment approach across public and private markets.”

    Recession risk ‘delayed rather than diminished’

    In a roundtable event on Tuesday, JPMorgan Asset Management strategists echoed this note of caution, claiming that the risk of a U.S. recession was “delayed rather than diminished” as the impact of higher rates feeds through into the economy.

    JPMAM Chief Market Strategist Karen Ward noted that many U.S. households took advantage of 30-year fixed rate mortgages while rates were still around 2.7%, while in the U.K., many shifted to five-year fixed rates during the Covid-19 pandemic, meaning the “passthrough of interest rates is much slower” than previous cycles.

    However, she highlighted that U.K. exposure to higher rates is due to rise from about 38% at the end of 2023 to 60% at the end of 2024, while first-time buyers in the U.S. will be exposed to much higher rates and the cost of other consumer debt, such as auto loans, has also risen sharply.

    “I think the the key conclusion here is that interest rates do still bite, it’s just taking longer this time around,” she said.

    We see slowdown in the U.S. economy in 2024 and no Europe recession: SocGen economist

    The U.S. consumer has also been spending pent-up savings at a faster rate than European counterparts, Ward highlighted, suggesting this is “one of the reasons why the U.S. has outperformed” so far, along with “incredibly supportive” fiscal policy in the form of major infrastructure programs and post-pandemic support programs.

    “All of that fades into next year as well, so the backdrop for the consumer just doesn’t look as strong for us as we go into 2024 that will start to bite a little bit,” she said.

    Meanwhile, corporates will over the next few years have to start refinancing at higher interest rates, particularly for high-yield companies.

    “So growth slows in 2024, and we still think the risks of a recession are significant, and therefore we’re still pretty cautious about the idea that we’ve been through the worst and we’re looking at an upswing from here on,” Ward said.

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  • Goldman says ‘shine is returning’ for gold as investors ramp up bets on rate cuts

    Goldman says ‘shine is returning’ for gold as investors ramp up bets on rate cuts

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    Ingots of 99.99 percent pure gold are placed in a workroom at Novosibirsk Refining Plant, Russia on September 15, 2023.

    Alexander Manzyuk | Anadolu Agency | Getty Images

    Gold prices on Monday rose to a more than six-month high as the U.S. dollar weakened and investors firmed up bets that the Federal Reserve is done with interest rate hikes.

    Spot gold was up 0.52% at $2,012.39 per ounce at 1:47 p.m. London time, but reached a May 16 high of $2,017.82 earlier in the day, Reuters reported. Gold futures for December hit $2,018.9, the highest level since Oct. 27, according to CNBC calculations.

    The dollar index, a measurement of the greenback against major currencies, was 0.13% lower as markets price in a more than 90% chance the Fed will hold rates at its next two meetings.

    CME’s FedWatch Tool shows a 25% probability of a cut as soon as March.

    A weaker dollar and lower interest rates are often flagged by market-watchers as boosting gold prices.

    Analysts at Goldman Sachs said in a note Sunday on the metals outlook for 2024 that gold’s “shine is returning.”

    “The potential upside in gold prices will be closely tied to U.S. real rates and dollar moves, but we also expect persistent strong consumer demand from China and India, alongside central bank buying to offset downward pressures from upside growth surprises and rate cut repricing,” they said.

    Bank of America analysts, meanwhile, said in a Sunday note that the commodities team’s base case was for gold to appreciate from the second quarter of 2024 as “real rates are pushed lower by the Fed cutting.”

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  • Financial stability ‘a very uncertain environment,’ Bundesbank VP says

    Financial stability ‘a very uncertain environment,’ Bundesbank VP says

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  • Mastercard says wide adoption of central bank digital currencies is ‘difficult’

    Mastercard says wide adoption of central bank digital currencies is ‘difficult’

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    BARCELONA, SPAIN – MARCH 01: A view of the MasterCard company logo on their stand during the Mobile World Congress on March 1, 2017 in Barcelona, Spain. (Photo by Joan Cros Garcia/Corbis via Getty Images)

    Joan Cros Garcia – Corbis | Corbis News | Getty Images

    SINGAPORE — There isn’t enough justification for the widespread use of central bank digital currencies right now, which makes broad adoption of such assets “difficult,” Ashok Venkateswaran, Mastercard‘s blockchain and digital assets lead for Asia-Pacific, told CNBC.

    “The difficult part is adoption. So if you have CBDCs in your wallet, you should have the ability for you to spend it anywhere you want – very similar to cash today,” said Venkateswaran on the sidelines of Singapore FinTech Festival on Wednesday.

    A retail CBDC, which is the digital form of fiat currency issued by a central bank, caters to individuals and businesses, facilitating everyday transactions. This is different from a wholesale CBDC which is used exclusively by central banks, commercial banks and other financial institutions to settle large-value interbank transactions.

    The International Monetary Fund has said that CBDCs are “a safe and low-cost alternative” to cash, with approximately 60% of countries in the world exploring CBDCs. However, only 11 countries have adopted them, with an additional 53 in advanced planning stages and 46 researching the topic as of June, according to data from the Atlantic Council.

    “But [building infrastructure to facilitate that] takes a lot of time and effort on a part of the country to do that. But a lot of the central banks nowadays have gotten very innovative because they are working very closely with private companies like ours, to create that ecosystem,” said the Asia-Pacific lead.

    Even then, Venkateswaran said consumers are “so comfortable using today’s type of money” such as paper money and coins, that “there isn’t enough justification to have a CBDC.”

    Mastercard, the second-largest card network in the U.S., said last week it has completed testing of its solution in the Hong Kong Monetary Authority’s e-HKD pilot program to simulate the use of a retail CBDC such as electronic Hong Kong dollars.

    Hong Kong’s CBDC sandbox facilitates the trial of minting, distributing and spending of e-HKD within the program.

    A total of 16 companies across the financial, payments and technology sectors including Mastercard participated in the pilot. Mastercard’s rival Visa also took part in the project alongside HSBC Bank and Hang Seng Bank, testing the viability of tokenized deposits in business-to-business payments.

    Venkateswaran cited Singapore as an example where the case for retail CBDC is not compelling enough as the city-state has a “very efficient” payments system.

    Last year, the IMF’s deputy managing director Bo Li named Singapore and Thailand as the countries in Asia which have made “quick progress” by connecting fast payment systems, therefore lowering transaction fees for cross-border payments.

    “There isn’t a reason for a retail CBDC [in Singapore] but there is a case for a wholesale CBDC for interbank settlements,” said Venkateswaran.

    On Thursday, Singapore’s central bank announced it will be piloting the live issuance and use of wholesale CBDCs from 2024.

    During the pilot, the Monetary Authority of Singapore will collaborate with domestic banks to test the use of wholesale CBDCs to facilitate domestic payments, said the managing director of the Monetary Authority of Singapore, Ravi Menon.

    It really depends on the need of the country or what problem they are trying to solve, said Mastercard’s Venkateswaran.

    It won’t work “if you’re only trying to replace your existing domestic payment network,” he said.

    “But if it’s a country where the domestic payment network is not as robust, it may make sense to have a CBDC.”

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  • Singapore to pilot use of wholesale central bank digital currencies in 2024

    Singapore to pilot use of wholesale central bank digital currencies in 2024

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    Ravi Menon, managing director of Monetary Authority of Singapore, speaks during the Singapore FinTech Festival in Singapore, on Thursday, Nov. 16, 2023. The festival runs through Nov. 17.

    Lionel Ng | Bloomberg | Getty Images

    SINGAPORE — Come 2024, Singapore will pilot the live issuance and use of wholesale central bank digital currencies, said Ravi Menon, managing director of the Monetary Authority of Singapore.

    “We will take our experiments a step further next year,” said Menon at Singapore FinTech Festival 2023 on Thursday, without specifying more details on the timeframe.

    “I’m pleased to announce that MAS will pilot the live issuance of wholesale CBDCs to instantaneously support payments across commercial banks here,” Menon said. MAS is the city-state’s central bank and financial regulator.

    Wholesale CBDC is a digital currency issued by a central bank, that’s used exclusively by central banks, commercial banks or other financial institutions to settle large-value interbank transactions. It’s unlike retail CBDCs which cater to individuals and businesses, facilitating everyday transactions.

    “Since 2016, the MAS has conducted many experiments with other central banks and the financial industry to explore the use of wholesale CBDCs on distributed ledgers to facilitate real time cross border payments and settlements,” said Menon, referring to the database spread across a network that is accessible from several geographical locations.

    One such pilot project is Project Ubin, which was started in 2016 to explore the use of blockchain and digital ledger technology for the clearing and settlement of payments and securities.

    Project Ubin was successfully completed in 2021 after five phases of experimentation. Some of the partners included Singapore’s largest bank DBS and sovereign wealth fund Temasek.

    MAS announced Ubin+ in November last year to advance cross-border connectivity with wholesale CBDCs through collaborations with international partners.

    During the pilot, Singapore’s central bank will partner with local banks to test the use of wholesale CBDCs to facilitate domestic payments, said Menon.

    Banks will issue tokenized bank liabilities in the form of claims in balance sheets. Retail customers can then use the tokenized bank liabilities in transactions with merchants, who will then credit these bank liabilities with their respective banks. Tokenization refers to the process of issuing a digital form of an asset on a blockchain.

    The CBDC will then be automatically transferred to the merchant as a form of payment during the transaction.

    “So clearing and settlement occurs in a single step on the same infrastructure, unlike the current system in which clearing and settlement take place on different systems and settlement occurs with a lag,” said Menon.

    Singapore is a safe haven in a 'difficult' global environment, Morgan Stanley says

    On Wednesday, the International Monetary Fund’s managing director urged the public sector to keep preparing to deploy CBDCs and related payment platforms in the future.

    “We have not yet reached land. There is so much more space for innovation and so much uncertainty over use-cases,” said Kristalina Georgieva.

    Menon is set to retire from public service and step down as managing director of MAS on Dec. 31 since being appointed to the position in 2011. He will be succeeded by Chia Der Jiun who previously spent 18 years at MAS.

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  • UBS boss Ermotti says ‘incredible’ bond demand is ‘a signal to the Swiss banking system’

    UBS boss Ermotti says ‘incredible’ bond demand is ‘a signal to the Swiss banking system’

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    UBS CEO Sergio Ermotti discusses the high demand for the Swiss bank’s recent issuance of AT1 bonds and shares his thoughts on the outlook for central banks.

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  • IMF says central bank digital currencies can replace cash: ‘This is not the time to turn back’

    IMF says central bank digital currencies can replace cash: ‘This is not the time to turn back’

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    Kristalina Georgieva, managing director of the International Monetary Fund, at a press conference at the IMF Headquarters on April 14, 2023.

    Kevin Dietsch | Getty Images News | Getty Images

    SINGAPORE — Central bank digital currencies have the potential to replace cash, but adoption could take time, said Kristalina Georgieva, managing director of the International Monetary Fund on Wednesday.

    “CBDCs can replace cash which is costly to distribute in island economies,” she said Wednesday at the Singapore FinTech Festival. “They can offer resilience in more advanced economies. And they can improve financial inclusion where few hold bank accounts.”

    CBDCs are the digital form of a country’s fiat currency, which are regulated by the country’s central bank. They are powered by blockchain technology, allowing central banks to channel government payments directly to households.

    “CBDCs would offer a safe and low-cost alternative [to cash]. They would also offer a bridge to go between private monies and a yardstick to measure their value, just like cash today which we can withdraw from our banks,” the IMF chief said.

    The IMF has said that more than 100 countries are exploring CBDCs – or approximately 60% of countries in the world.

    “The level of global interest in CBDCs is unprecedented. Several central banks have already launched pilots or even issued a CBDC,” the IMF said in a September report.

    According to a 2022 survey conducted by the Bank for International Settlements, of the 86 central banks surveyed, 93% said they were exploring CBDCs, while 58% said they were likely to or may possibly issue a retail CBDC in either the short or medium term.

    But as of June, only 11 countries have adopted CBDCs, with an additional 53 in advanced planning stages and 46 researching the topic, according to data from the Atlantic Council.

    … this is not the time to turn back. The public sector should keep preparing to deploy CBDCs and related payment platforms in the future.

    Kristalina Georgieva

    Managing director, IMF

    Referring to a 2018 speech by her predecessor Christine Lagarde, when the former IMF chief encouraged policymakers to follow the “winds of change” and explore the use of CBDCs, Georgieva said: “Five years on, I’m here to provide an update on that voyage.”

    “First, countries did set sail. Many are investigating CBDCs and are developing regulation to guide digital money developments,” said Georgieva referring to the speech.

    On Wednesday, the fund launched a CBDC handbook as a reference guide for policymakers around the world. Georgieva said many countries are investigating CBDCs and developing regulation to guide digital money developments.

    “Second, we have not yet reached land. There is so much more space for innovation and so much uncertainty over use-cases,” Georgieva told an audience which included industry experts, investors and journalists.

    “In some countries the case seems dim today, but even they should remain open to potentially deploy CBDCs tomorrow. Why?” said Georgieva. “This is not the time to turn back.”

    “The public sector should keep preparing to deploy CBDCs and related payment platforms in the future. Fourth, these platforms should be designed from the start to facilitate cross-border payments, including with CBDCs,” the managing director said.

    Potential of CBDCs

    Countries that have issued retail CBDC include the Bahamas, Jamaica and Nigeria.

    Singapore’s Monetary Authority of Singapore has said that cash is “generally incompatible” with the digital economy. In a 2021 report, the country’s central bank said the demand for cash as a means of payment is set to decline further.

    According to the BIS, using CBDCs for cross-border payments could lower the costs of obtaining, storing and spending foreign currency, depending on design and regulations.

    Georgieva also said that artificial intelligence “could amplify some of the benefits of CBDCs” by providing accurate credit scoring and personalized support.

    Demand for generative AI has boomed following the release of OpenAI’s ChatGPT in November last year, which was estimated to have reached 100 million monthly active users within two months after launch.

    “It could improve financial inclusion by providing rapid, accurate credit scoring based on various data. It could provide personalized support to people with low financial literacy,” said Georgieva.

    “To be sure, we need to protect personal privacy and data security, and avoid embedded biases so we don’t perpetuate inequality but aim to reduce it. Managed prudently, AI could help,” she added.

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  • Former St. Louis Fed president says the FOMC still has ‘a ways to go’ on inflation

    Former St. Louis Fed president says the FOMC still has ‘a ways to go’ on inflation

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    James Bullard at Jackson Hole, Wyoming.

    David A. Grogan | CNBC

    Former St. Louis Fed President Jim Bullard says the Federal Reserve still has “a ways to go” in fighting inflation and that there is still a risk that prices pick up once again.

    Between March 2022 and July 2023, the FOMC enacted a run of 11 rate hikes to take the Fed funds rate from a target range of 0.25-0.5% to 5.25-5.5%, and inflation has since fallen substantially.

    Although markets now believe interest rates have peaked and have begun looking forward to cuts next year, Bullard — who stepped down as head of the St. Louis Fed in August — suggested the central bank’s work is far from over.

    “It’s been so far so good for the FOMC. Inflation has come down, core PCE inflation on a 12-month basis down from 5.5% to 3.7% — pretty good but that’s still only halfway back to the 2% target so you’ve still got a ways to go,” he told CNBC’s Joumanna Bercetche on the sidelines of the UBS European Conference in London.

    “I think you have to watch the data carefully and it’s very possible that inflation will turn around and go the wrong way.”

    October’s consumer price index slated for release Tuesday is expected to show an increase of 0.1% month-on-month and 3.3% annually, according to a Dow Jones poll of economists.

    “That’s just one month’s number, but still I think the risk for the FOMC is that the nice disinflation that we’ve seen over the last 12 months won’t persist going forward and then they’ll have to do more,” Bullard said.

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  • Dispersion is coming among emerging market central banks, Citi analyst says

    Dispersion is coming among emerging market central banks, Citi analyst says

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    Luis Costa, global head of EM sovereign credit at Citi, says dispersion is coming in emerging market monetary policy, offering opportunities for investors.

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  • Powell says Fed is ‘not confident’ it has done enough to bring inflation down

    Powell says Fed is ‘not confident’ it has done enough to bring inflation down

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    Federal Reserve Chairman Jerome Powell said Thursday that he and his fellow policymakers are encouraged by the slowing pace of inflation but are unsure whether they’ve done enough to keep the momentum going.

    Speaking a little more than a week after the central bank voted to hold benchmark policy rates steady, Powell said in remarks for an International Monetary Fund audience in Washington, D.C., that more work could be ahead in the battle against high prices.

    “The Federal Open Market Committee is committed to achieving a stance of monetary policy that is sufficiently restrictive to bring inflation down to 2 percent over time; we are not confident that we have achieved such a stance,” he said in his prepared speech.

    For the second time in recent weeks, a public address from Powell was interrupted by climate protesters. He briefly left the stage before resuming.

    The speech comes with inflation still well above the Fed’s long-standing goal but also considerably below its peak levels in the first half of 2022. In a series of 11 rate hikes that constituted the most aggressive policy tightening since the early 1980s, the committee took its benchmark rate from near zero to a target range of 5.25%-5.5%.

    Those increases have coincided with the Fed’s preferred inflation gauge, the core personal consumption expenditures price index, to fall to an annual rate of 3.7%, from 5.3% in February 2022. The more widely followed consumer price index peaked above 9% in June of last year.

    Powell said that inflation is “well above” where the Fed would like to see it while describing policy as “significantly restrictive.”

    “My colleagues and I are gratified by this progress but expect that the process of getting inflation sustainably down to 2 percent has a long way to go,” he said. “We will keep at this until we succeed,” he later added, saying the Fed is focused on whether rates need to go higher and how long they need to stay elevated.

    Stocks headed lower after the speech, with the Dow Jones Industrial Average down close to 200 points. Treasury yields lurched higher after declining for most of the past three weeks, propelled up in large part after a poorly received 30-year bond auction.

    “Chairman Powell issued a warning to investors too giddy on the prospect of rate cuts next year,” said Jeffrey Roach, chief economist at LPL Financial. “The Fed will be true to its mandate and hike further should inflation reaccelerate.”

    As he has in recent speeches, Powell stressed that the Fed nevertheless can be cautious as the risks between doing too much and too little have come into closer balance. He said the Fed is attuned to the rise in Treasury yields.

    “If it becomes appropriate to tighten policy further, we will not hesitate to do so,” he said. “We will continue to move carefully, however, allowing us to address both the risk of being misled by a few good months of data, and the risk of overtightening.”

    “Monetary policy is generally working the way we think it should work” Powell said during a discussion following his speech.

    Markets are largely convinced the Fed is through hiking rates.

    Futures pricing, according to the CME Group, indicates less than a 10% probability that the FOMC will approve a final rate hike at its Dec. 12-13 meeting, even though committee members in September penciled in an additional quarter percentage point rise before the end of the year.

    Traders anticipate the Fed will start cutting next year, probably around June.

    Powell noted the progress the economy has made. Gross domestic product accelerated at a “quite strong” 4.9% annualized pace in the third quarter, though Powell said the expectation is for growth to “moderate in coming quarters.” He described the economy as “just remarkable” in 2023 in the face of a broad consensus that a recession was inevitable.

    Unemployment remains low, though the jobless rate has risen half a percentage point this year, a move commonly associated with recessions.

    But Powell noted that the Fed is “attentive” that stronger-than-expected growth could undermine the fight against inflation and “warrant a response from monetary policy.”

    He also pointed out that improvements in supply chains have helped ease inflation pressures, but “it is not clear how much more will be achieved by additional supply-side improvements. Going forward, it may be that a greater share of the progress in reducing inflation will have to come from tight monetary policy restraining the growth of aggregate demand.”

    The remarks are part of a broader presentation he is giving to the Jacques Polak Annual Research Conference. One broad policy topic he addressed was the challenge posed by keeping rates anchored near zero, where they were before the inflation surge. Powell said it is “too soon” to say whether zero-rate challenges are “a thing of the past.”

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  • CNBC Daily Open: Strange, but good, things are happening in markets and the economy

    CNBC Daily Open: Strange, but good, things are happening in markets and the economy

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    People walk by the New York Stock Exchange (NYSE) on November 02, 2023 in New York City. 

    Spencer Platt | Getty Images News | Getty Images

    This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

    What you need to know today

    A fierce winning streak
    U.S. stocks rose Tuesday to hit fresh winning streaks, their longest in three years. But Asia-Pacific markets were mixed Wednesday. Japan’s Nikkei 225 ticked down 0.1% despite rising confidence among large Japanese manufacturers, according to a Reuters Tankan survey. Meanwhile, Australia’s S&P/ASX 200 climbed 0.2% a day after the country’s central bank raised rates by 25 basis points.

    Microsoft closes at a high
    Microsoft shares climbed 1.12% to hit $360.53, a record high. It’s the eighth consecutive day in which the technology giant’s shares rose, a streak unseen since January 2021. Investors cheered Microsoft CEO Satya Nadella’s surprise appearance at OpenAI’s event, where he encouraged developers to build with Microsoft’s Azure cloud infrastructure.

    ‘Absolutely booming’ Chinese sector
    China’s economy hasn’t recovered from its pandemic blues. But in the sectors of “electric vehicles and everything around sustainability and renewable power technology,” China is “absolutely booming,” Standard Chartered CEO Bill Winters told CNBC. Relatedly, China’s truck industry is increasingly using vehicles with assisted-driving technology, a critical step toward monetizing the nascent business.

    Peak, not pause?
    The U.S. Federal Reserve, European Central Bank and the Bank of England all paused interest rate hikes in recent weeks. This breather comes after dramatic hikes over the last 18 months as central banks grappled with unruly inflation. Some market watchers, in fact, think this lull in hikes isn’t so much a pause but the peak in rates — and are turning their attention to when central banks will start cutting.

    [PRO] Buy BYD
    Over the past 18 months, Warren Buffett’s Berkshire Hathaway has sold more than half its stake in Chinese electric vehicle maker BYD, according to stock filings. Despite that, analysts still think BYD’s a stock worth buying — and some even raised their price targets for the firm.

    The bottom line

    Last month’s sudden surge in Treasury yields and oil prices — both of which tend to suppress investors’ appetite for stocks — looks to be ending. No, scratch that — the increases aren’t just ending, they’re ebbing.  

    Look at oil: Contracts for both West Texas Intermediate and Brent futures fell around $3. WTI’s now at $77.01 a barrel while Brent’s $81.44, their lowest since July. That’s almost $10 per barrel less compared with a month ago, when prices jumped on fears triggered by the Israel-Hamas conflict.

    Meanwhile, the 10-year Treasury yield fell around 10 basis points to 4.569% and the 2-year yield slipped 3 basis points to 4.915%. As Treasury yields serve as the benchmark for interest rates on loans and cash investments, sinking yields generally benefit rate-sensitive companies more. In other words: the Magnificent Seven Big Tech. Amazon led the pack, shooting up 2.13% yesterday.

    That explains why the Nasdaq Composite jumped 0.9%, more than the S&P 500’s 0.28% gain and the Dow Jones Industrial Average’s 0.17% increase. Still, that’s not downplaying the movements. The S&P and Dow are enjoying their seventh consecutive session of gains, while the Nasdaq’s basking in its eighth.

    If the U.S. Federal Reserve does indeed steer the economy to a soft landing, in which inflation is contained below 2% without the economy contracting, then there could be a further rally in stocks, said HSBC. Within periods of soft landings, the S&P has jumped, on average, 22% in the space between a pause and six months after rate cuts begin, noted HSBC’s global equity strategist Alastair Pinder.

    And that immaculate disinflation isn’t just a dream. Chicago Federal Reserve President Austan Goolsbee told CNBC, “Because of some of the strangeness of this moment, there is the possibility of the golden path … that we got inflation down without a recession.”

    Both the economy and markets have truly acted in strange, unprecedented ways ever since the pandemic. From one of the worst years for stocks and bonds in 2022, to a widely heralded bull rally in the S&P — and then a correction — in 2023. And I haven’t even started on the U.S. labor market and inflation numbers. Strange may be new and unsettling, but it isn’t necessarily bad.

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  • Bank of England governor says Israel-Hamas conflict poses risks to inflation fight

    Bank of England governor says Israel-Hamas conflict poses risks to inflation fight

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    Bank of England Governor Andrew Bailey said Thursday that the ongoing Israel-Hamas war poses a potential risk to the bank’s efforts to bring down inflation.

    Bailey told CNBC that aside from the immense human tragedy brought about by the now almost four-week conflict, the possible knock-on effects for energy markets were significant, risking a resurgence in price rises.

    “So far, I would say, we haven’t seen a marked increase in energy prices, and that’s obviously good,” Bailey told CNBC’s Joumanna Bercetche.

    “But it is a risk. It obviously is a risk going forward,” he said.

    Oil prices have fluctuated over recent weeks as investors have eyed developments in the Middle East amid concerns that the fighting could spill over into a wider conflict in the energy-rich region.

    The World Bank warned in a quarterly update Monday that crude oil prices could rise to more than $150 a barrel if the conflict escalates. As of Thursday 3:30 p.m. London time, Brent crude was trading up just over 1% at $85.65 a barrel.

    Bailey said that, should energy prices push significantly higher, the central bank’s response would depend on the wider economic circumstances and how persistent policymakers expect the price rises to be.

    The Bank of England has been steadfast in its efforts to bring down inflation, only ending its run of 14 consecutive interest rate hikes in September after data showed inflation running below expectations.

    On Thursday, the bank held interest rates steady once again but said that monetary policy would need to remain tight for an “extended period of time.”

    The Monetary Policy Committee voted 6-3 in favor of keeping the main bank rate at 5.25%, with three members preferring another 25 basis point hike to 5.5%.

    “We’re going to have to hold them [interest rates] in restrictive territory for some time,” Bailey said.

    “The risks are still on the upside,” he continued. “It’s really just too soon to start talking about cutting interest rates.”

    U.K. inflation came in at 6.7% in September, slightly ahead of expectations and unchanged from the previous month.

    The bank now expects the consumer price index to average around 4.75% in the fourth quarter of 2023 before dropping to around 4.5% in the first quarter of next year and 3.75% in the second quarter of 2024.

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  • The Federal Reserve leaves rates unchanged. Here’s what that means for your wallet

    The Federal Reserve leaves rates unchanged. Here’s what that means for your wallet

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    The Federal Reserve left its target federal funds rate unchanged for the second consecutive time Wednesday.

    Even so, consumers likely will get no relief from current sky-high borrowing costs.

    Altogether, Fed officials have raised rates 11 times in a year and a half, pushing the key interest rate to a target range of 5.25% to 5.5%, the highest level in more than 22 years. 

    “Relief for households isn’t likely to come soon, at least not directly in the form of a cut in the fed funds rate,” said Brett House, economics professor at Columbia Business School.

    The consensus among economists and central bankers is that interest rates will stay higher for longer, or until inflation moves closer to the central bank’s 2% target rate.

    What the federal funds rate means for you

    The federal funds rate, which is set by the central bank, is the interest rate at which banks borrow and lend to one another overnight. Although that’s not the rate consumers pay, the Fed’s moves still affect the borrowing and savings rates they see every day.

    To a certain extent, many households have been shielded from the brunt of the Fed’s rate hikes so far, House said. “They locked in fixed-rate mortgages and auto financing before the hiking cycle began, in some cases at record-low rates during the pandemic.”

    However, higher rates have a significant impact on anyone tapping a new loan for big-ticket items such as a home or a car, he added, and especially for credit card holders who carry a balance.

    Here’s a breakdown of how it works.

    Credit card rates are at all-time highs

    Since most credit cards have a variable rate, there’s a direct connection to the Fed’s benchmark. As the federal funds rate rose, the prime rate did as well, and credit card rates followed suit.

    Credit card annual percentage rates are now more than 20%, on average — an all-time high. Further, with most people feeling strained by higher prices, more cardholders carry debt from month to month.

    “Rising debt is a problem,” said Sung Won Sohn, professor of finance and economics at Loyola Marymount University and chief economist at SS Economics.

    “Consumers are using a lot of credit card debt and paying very high interest rates,” Sohn added. “That doesn’t bode well for the long-term economic outlook.”

    For those borrowers, “interest rates staying higher for a longer period underscores the urgency to pay down and pay off costly credit card debt,” said Greg McBride, chief financial analyst at Bankrate.com.

    Home loans: Deals slow to ‘standstill’

    Although 15-year and 30-year mortgage rates are fixed and tied to Treasury yields and the economy, anyone shopping for a new home has lost considerable purchasing power, partly because of inflation and the Fed’s policy moves.

    The average rate for a 30-year, fixed-rate mortgage is up to 8%, the highest in 23 years, according to Bankrate.

    “Purchase activity has slowed to a virtual standstill, affordability remains a significant hurdle for many and the only way to address it is lower rates and greater inventory,” said Sam Khater, Freddie Mac’s chief economist.

    Prospective buyers attend an open house at a home for sale in Larchmont, New York, on Jan. 22, 2023.

    Tiffany Hagler-Geard | Bloomberg | Getty Images

    Other home loans are more closely tied to the Fed’s actions. Adjustable-rate mortgages and home equity lines of credit, or HELOCs, are pegged to the prime rate. Most ARMs adjust once a year after an initial fixed-rate period. But a HELOC rate adjusts right away. Now, the average rate for a HELOC is near 9%, the highest in over 20 years, according to Bankrate.

    Still, Americans are sitting on more than $31.6 trillion worth of home equity, according to Jacob Channel, senior economist at LendingTree. “Owing to that, many homeowners could benefit from tapping into the equity they’ve built with a home equity loan or line of credit.”

    Auto loan payments get bigger

    Student loans: New borrowers take a hit

    Federal student loan rates are also fixed, so most borrowers aren’t immediately affected by the Fed’s moves. But undergraduate students who take out new direct federal student loans are now paying 5.50% — up from 4.99% in the 2022-23 academic year and 3.73% in 2021-22.

    The government sets the annual rates on those loans once a year, based on the 10-year Treasury.

    If the 10-year yield stays near 5%, federal student loan interest rates could increase again when they reset in the spring, costing student borrowers even more in interest.

    Savings account holders are earning more

    “Borrowers are being squeezed, but the flipside is that savers are benefiting,” McBride said.

    While the Fed has no direct influence on deposit rates, the yields tend to be correlated to changes in the target federal funds rate. The savings account rates at some of the largest retail banks, which were near rock bottom during most of the Covid pandemic, are currently up to 0.46%, on average, according to the Federal Deposit Insurance Corp.

    “Average rates have risen significantly in the last year, but they are still very low compared to online rates,” added Ken Tumin, founder and editor of DepositAccounts.com.

    Some top-yielding online savings account rates are now paying more than 5%, according to Bankrate, which is the most savers have been able to earn in nearly two decades.

    “Savings are now earning more than inflation, and we haven’t been able to say that in a long time,” McBride said.

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  • Credit Suisse intervention avoided ‘financial crisis,’ Swiss National Bank chairman says

    Credit Suisse intervention avoided ‘financial crisis,’ Swiss National Bank chairman says

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    Thomas Jordan, president of the Swiss National Bank (SNB), speaks during the bank’s annual general meeting in Bern, Switzerland, on Friday, April 28, 2023.

    Bloomberg | Bloomberg | Getty Images

    Jordan suggested that without the ELA+ loan, which was not secured in the manner typically required by the SNB, Credit Suisse risked being unable to meet its financial obligations, jeopardizing systemic stability.

    Jordan’s comments echoed those of FINMA CEO Urban Angehrn, who suggested in April that allowing Credit Suisse to fall into bankruptcy would have crippled the Swiss economy and likely resulted in deposit runs on other banks.

    However, Jordan noted that that there were important lessons to be learned regarding liquidity regulations and protecting against faster and larger outflows of customer deposits, according to Reuters.

    The Swiss government, SNB and FINMA faced criticism and legal challenges over their handling of the forced takeover, particularly over the lack of shareholder input and the wipeout of $17 billion of Credit Suisse’s additional tier-one (AT1) bonds, which were written down to zero while common stockholders received payouts.

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  • Zombie firms are filing for bankruptcy as the Fed commits to higher rates

    Zombie firms are filing for bankruptcy as the Fed commits to higher rates

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    In the U.S., 516 publicly listed firms have filed for bankruptcy from January through September 2023. Many of these firms have survived for several years with surging debt and lagging sales.

    “The share of zombie firms has been increasing over time,” said Bruno Albuquerque, an economist at the International Monetary Fund. “This has detrimental effects on healthy firms who compete in the same sector.”

    Zombie firms are unprofitable businesses that stay afloat by taking on new debt. Banks lend to these weak firms in hopes that they can turn their trend of sinking sales around.

    “A really healthy, well-capitalized banking system and financial sector is one of the most important factors in ensuring that unhealthy firms are wound down in a timely way rather than being propped up,” said Kathryn Judge, a professor of law at Columbia University.

    Economists say that zombie firms may become more prevalent when banks or governments bail out unviable firms. But the Federal Reserve says the share of firms that are zombies fell after the Covid-19 emergency stimulus measures were implemented. The Fed says banks are refusing to keep weak firms in business with favorable extensions of credit.

    The Fed economists point to healthy balance sheets at U.S. firms, despite the increasing weight of interest rate hikes. The effective federal funds rate was 5.33% in October 2023, up from 0.08% in October 2021.

    “The biggest implication of the rapid rise in interest rates that we’ve seen the last five or six quarters, actually, is that it reestablished cash,” said Lotfi Karoui, chief credit strategist at Goldman Sachs. “That actually puts some constraints on risk assets.”

    The Fed says it thinks interest rates will remain higher for longer. “Given the fast pace of tightening, there may still be meaningful tightening in the pipeline,” Fed Chair Jerome Powell said at an Economic Club of New York speech Oct. 19.

    Watch the video above to learn more about the Fed’s battle with unviable zombie firms in the U.S.

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  • How the Fed fights zombie firms

    How the Fed fights zombie firms

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    Some firms sustain their businesses by taking on more debt that they can repay. Economists call them zombie companies. When compared to their peers, zombies are smaller in size and deliver lower returns to investors. These companies distort markets, keeping resources from their fundamentally sound competitors. Banks and governments keep zombie firms alive with bailout loans. As the Federal Reserve resets the economy with higher interest rates, many zombie firms are filing for bankruptcy.

    10:01

    Tue, Oct 31 20236:00 AM EDT

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  • The Federal Reserve may not hike interest rates next week, but consumers are unlikely to feel any relief

    The Federal Reserve may not hike interest rates next week, but consumers are unlikely to feel any relief

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    Credit card rates top 20%

    Most credit cards come with a variable rate, which has a direct connection to the Fed’s benchmark rate.

    After the previous rate hikes, the average credit card rate is now more than 20% — an all-time high. Further, with most people feeling strained by higher prices, balances are higher and more cardholders are carrying debt from month to month.

    Even without a rate hike, APRs may continue to rise, according to according to Matt Schulz, chief credit analyst at LendingTree. “The truth is that today’s credit card rates are the highest they’ve been in decades, and they’re almost certainly going to keep creeping higher in the next few months.”

    Mortgage rates are at 8%

    Although 15-year and 30-year mortgage rates are fixed, and tied to Treasury yields and the economy, anyone shopping for a new home has lost considerable purchasing power, partly because of inflation and the Fed’s policy moves.

    The average rate for a 30-year, fixed-rate mortgage is up to 8%, the highest in 23 years, according to Bankrate.

    “Rates have risen two full percentage points in 2023 alone,” said Sam Khater, Freddie Mac’s chief economist. “Purchase activity has slowed to a virtual standstill, affordability remains a significant hurdle for many and the only way to address it is lower rates and greater inventory.”

    Adjustable-rate mortgages, or ARMs, and home equity lines of credit, or HELOCs, are pegged to the prime rate. As the federal funds rate rose, the prime rate did, as well, and these rates followed suit.

    Now, the average rate for a HELOC is near 9%, the highest in over 20 years, according to Bankrate.

    Auto loan rates top 7%

    Federal student loans are now at 5.5%

    Federal student loan rates are also fixed, so most borrowers aren’t immediately affected by the Fed’s moves. But undergraduate students who take out new direct federal student loans are now paying 5.50% — up from 4.99% in the 2022-23 academic year and 3.73% in 2021-22.

    For those with existing debt, interest is now accruing again, putting an end to the pandemic-era pause on the bills that had been in effect since March 2020.

    So far, the transition back to payments is proving painful for many borrowers.

    Private student loans tend to have a variable rate tied to prime, Treasury bill or another rate index — and that means that those borrowers are already paying more in interest. How much more, however, varies with the benchmark.

    Deposit rates at some banks are up to 5%

    “Borrowers are being squeezed but the flipside is that savers are benefiting,” said Greg McBride, chief financial analyst at Bankrate.com.

    While the Fed has no direct influence on deposit rates, the yields tend to be correlated to changes in the target federal funds rate. The savings account rates at some of the largest retail banks, which were near rock bottom during most of the Covid pandemic, are currently up to 0.46%, on average, according to the Federal Deposit Insurance Corp., or FDIC.

    However, top-yielding online savings account rates are now paying over 5%, according to Bankrate — which is the most savers have been able to earn in nearly two decades.

    “Moving your money to a high-yield savings account is the easiest money you are ever going to make,” McBride said.

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  • Watch live: ECB President Christine Lagarde speaks after opting to hold rates

    Watch live: ECB President Christine Lagarde speaks after opting to hold rates

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    [The stream is slated to start at 8:45 a.m. ET. Please refresh the page if you do not see a player above at that time.]

    European Central Bank President Christine Lagarde is giving a press conference following the bank’s latest monetary policy decision.

    The ECB ended its run of rate hikes on Thursday after 10 consecutive increases, keeping its key rate at a record high of 4%.

    Subscribe to CNBC on YouTube. 

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