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Sergey Golubev, 2016.06.29 10:54
Brexit - how will central banks respond? (based on the article)
Bank of England"Some believe rates could be cut as early as next week, however others think the BoE will wait."
US Federal Reserve"The US Federal Reserve began the year expecting to raise interest
rates at least four times. The bond market expects no tightening this
year and as a result of Brexit has begun to price in a small chance of
an easing for 2016. The US two-year note yield has fallen to about 0.60
per cent, a level seen last October, before the Fed’s first tightening
of policy for the current cycle. The recent dollar appreciation “represents in itself a form of
monetary tightening and consequently the need for [the] Fed to raise
rates has been pushed out further."
European Central Bank"Mr Draghi is expected to cut interest rates further, or could expand QE
in value or scope. However, his calls for structural reform are
difficult as governments do not have strong mandates and many eurozone
countries are facing elections."
Bank of Japan"Brexit has fuelled expectations the BoJ will ease policy at its meeting
in late July. They could cut negative interest rates further or apply
them more broadly, but since being introduced in January, the BoJ’s Nirp
has hurt banks - share prices are down more than a third this year.
Expanding the massive and complex QE programme is another option."
People’s Bank of China"The PBoC reacted to Brexit by adjusting the renminbi fix rate
on Monday by the most since 2010 - a big move which "if done in
isolation would have freaked markets out. They want the market to determine the exchange rate on a
managed basis because they don’t want the outflows to become acute", says Geoff Yu of UBS Asset