“Central Bank Meetings and Economic Outlook: Analysis and Predictions for May Holidays”

Happy May Day everyone! However, the May holidays are not yet a reason to relax.
Moreover, always all the most interesting usually begins to happen precisely during the holidays. C’est la vie…

Three central banks will meet during the week. On Tuesday – Wednesday – and Thursday – (usually the Bank of England also gives its decision on the rate the next day after the Fed’s decision, but this time this event will occur on 11/05).

Will regulators change their tough stance given the latest data? This refers to a sharp slowdown in the economy.

Let’s start with the USA

Despite the weak data on , the rate, with a high degree of probability, will be increased by a quarter of a point to 5.25%.

Another question is whether the Fed will stop there, or whether the fight against rising consumer prices will continue. Judging by the rhetoric of individual FOMC members, Mr. Powell’s speech may be disappointing. According to the “manager” Lisa Cook, inflation in the US is still too high, and everything is not so clear in the future of monetary policy.

In a conversation with Russian pranksters, by the way, the head of the Fed also did not rule out a 50 bp increase in rates. P.

What about the facts?

♦ An overheated labor market is the reason for the “continuation of the banquet”. The weekly hit 230,000 for the week ended April 22, below analysts’ expectations of 248,000, the lowest level in three weeks.

The moral is that the labor market remains strong.

♦ On the other hand, we have problems in the banking sector in full swing. If JPMorgan Chase & Co. or PNC Financial Services to acquire First Republic Bank (NYSE:) will not receive approval, intervention by the Federal Deposit Insurance Corporation (FDIC) will be required.

♦ Well, the situation in commercial real estate as a whole is extremely difficult. By the way, we will talk about this separately.

As for Europe

While interest rates are at their highest level since 2008, the ECB is unlikely to pause.

Let me remind you that , which does not include prices for unprocessed food or energy, rose in March to a record 5.7%.

The most likely scenario is a rate increase of 25 bp. n. in May and June. In the worst case, the regulator will take a break only after the July meeting. As the head of the National Bank of Croatia, Boris Vuychich, said, the work of the regulator will continue until the “winning end”.

Victory over what? Over the economy?

As for the RBA

Despite the high rate in the country (≈7%), the cycle of raising interest rates in Australia is probably over. To be more precise, there will be no further rate hikes, and the first rate cuts will occur in the autumn.

What else is in store for us this week?

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So far, the reporting season has not been called a “failed” season. Earnings fell 1.9% YoY, according to Refinitiv data, although just over half of the S&P 500 companies reported.
For comparison, in early April, analysts predicted a fall of 5.1%

So, despite the difficult situation in real estate and the banking sector, the economy stubbornly does not want to decline.

It is at the junction of all this that we will live.

My opinion is that we will not immediately see the impact of rising rates. But when we really see it, I’m afraid the Fed will have to react much more quickly and already save the economy.

Moreover, at the same time with all the above problems, we observe and a fairly rapid decline in the money supply.

The fall in the money supply is the sharpest in 60 years. In principle, this does not bode well for the markets.

So once again, Happy Holidays everyone. And with understanding – May we have to go through, it seems, not the most “affectionate”.