News & Analysis

This week was a big one in the banking world, with a flurry of central bank announcements and growing pains in US regional banks. The Federal Reserve, European Central Bank, and Norgesbank all hiked their policy rates by 25bps, but with sharply divergent communications about the future path. Brazil’s central bank also had a policy decision, but it merely maintained its long-standing pause. The general theme of the G10 central banks is that the end of the cycle is approaching. Even central banks who are not yet on pause may only have a couple of hikes left in the tank, meaning that they will likely cease hiking rates by the end of summer. For commercial banks, while fears had somewhat dissipated in the weeks after Silicon Valley Bank’s mid-March collapse, they returned in force this week. First Republic was placed into receivership and sold to JP Morgan on Monday, while rumours are swirling that PacWest and Western Alliance could be the next dominoes to fall. Policymakers and regulators have repeatedly assured markets that the three bank failures this year were isolated cases caused by management failures, rather than anything systemic. But considering they said the same in past crises, their message is beginning to ring hollow. Their downplaying of the risks does not strike us as reassuring, but complacent. Next week, the biggest event will be the Bank of England’s policy decision. We also discuss upcoming inflation data for the US and Brazil, as well as UK GDP.

You can read the Week Ahead in full here:




Simon Harvey, Head of FX Analysis

Jay Zhao-Murray, FX Market Analyst

María Marcos, FX Market Analyst

Nick Rees, FX Market Analyst


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