The Interest Rate Dilemma: A Week of Reckoning for Central Banks

This week, investors’  attention is fixated on the actions of central banks, particularly the Federal Reserve and the European Central Bank (ECB). The backdrop to this anticipation has been set by the unexpected rate hikes from the Reserve Bank of Australia and the Bank of Canada, which occurred last week. These moves, contrary to the prevailing consensus, have not only sent ripples through the financial markets, but also reshaped the discourse around the durability of current interest rates. The financial community is now confronting the stark realisation that the much-anticipated rate cuts may not materialise this year, and possibly might not surface until well into the next year.

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Threading the needle: The Impact and Risks of Monetary Policy Tightening 

Over the past few decades, the United States has experienced several periods of monetary policy tightening, characterised by increases in the Federal Funds Rate (FFR). These rate hikes have significant implications on the financial environment, particularly on firms’ ability to access credit. This article examines the correlation between monetary policy tightening and lending standards, discussing the potential risks and benefits associated with further rate hikes on the U.S. economy.

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Martin Tarpanov: Europe Spends More Than It Earns and May Soon Face Poverty

Picture of an open purse with a few coins inside

Sources: Dreamstime | Author: DeltaStock

Reading time: 3 minutes

European countries are generating huge deficits this year, while at the same time the bond market has slowed to a crawl and is forcing central banks to make difficult decisions that could affect the entire economy.

Here’s what Martin Tarpanov, head of DeltaStock’s “Fixed Income Securities” department, makes of the whole situation and where it could be headed next.

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