Comment: The trader finally listened to the central banks speech to speak in the

Source: Bloomberg

Author: Aline oyamada, James Hirai

In the world's largest markets, traders have finally listened to the central bank's warning, which has lowered betting on a sharp interest rate cut this year.

After the first acceleration of inflation in the United Kingdom announced that inflation has appeared in the past year, the market has regained interest rates on Wednesday.After the release of British data for several minutes, the market reduced the expectations of interest rate cuts this year from 6 expected to four times last month.

The retail sales announced by the United States earlier that day also exceeded the expected level, reminding the market's inflation pressure to still be unpopular.The news promoted the decline in U.S. Treasury bonds, and traders also lowered betting on the Fed's interest rate cut.

In the past few days, the European Central Bank and the Fed have been more cautious about the prospects of monetary policy easing.British data may only be a small waves in the long -term decline of inflation, but it helps decision makers to pass policy signals and reduce the enthusiasm of the market to reduce interest at the market.

Traders are now closely paying close attention to the interest rate cuts of major central banks this year.They postponed the expected time of the first operation, thinking that the possibility of interest rate cuts in the first quarter was lower.

Jane Foley, director of the foreign exchange strategy of the Dutch Cooperation Bank, said, "British data is provided by the central bank's governor to suppress interest rate cuts to provide promising music. It is expected that more market participants expect Britain to reduce interest rates in the euro and the United States this year."

The cautious attitude of the central bank's governor for interest rate cuts is based on many reasons, including the toughness of the employment market and the economy, and worrying about inflation viscosity.

Many central banks still remembers the rise of inflation before. They originally expected that inflation was only temporary, but this was far from this.Nowadays, even if the inflation of many economies has been touched, they are still afraid of underestimating the threat of inflation and alert the risk of premature or too fast to relax.

Ron O’Hanley, CEO of Daofu Group, delivered a speech in Davos on Wednesday that the health status of the US labor market and economy means that the Fed would rather risk the interest rate.

He said, "I think the Fed does not want to see inflation and soil coming, and the Fed's dotted map is already very clear. I don't know why the market is faintly bet. This has no reason."

distraction

On Tuesday, the Federal Reserve director Christopher Waller said that the Fed should act carefully when starting interest rate cuts.

The market is currently expected to cut interest rates of 142 basis points this year, lower than the 166 basis points predicted last week.The possibility of raising interest rates in March was once considered to be nail on the board, and the probability is only slightly more than 50%.

The European Central Bank Governor Ragard commented on Wednesday that the beta betting was a kind of interference.

She said in an interview with Bloomberg House, "If inflation is much higher than possible, it will not help us fight inflation."

In the UK, inflation data is the main market -driven factor.Traders are now more optimistic about paying interest rates four times this year, rather than five times expected on Tuesday and six times a month ago.The market is determined to cut interest rates for the first time than June, not May.

But even if the central bank officials dilute the expectations and pace of interest rate hikes, the direction of interest rate adjustment seems to be sure.

James Rossiter, head of Global Macro Strategy of Daoming Bank, and many economists pointed out that British inflation data is driven by several volatile factors, such as air ticket prices, and the latter will soon fall.

Supply bottleneck

Ragard pointed out the danger of inflation to rise in an interview with Bloomberg.She said she is "close attention" salary negotiations, profit margins, energy prices and new bottlenecks.

"More and more people realize that the central bank will not be eager to cut interest rates rapidly," said Susannah Streeter, the currency and market director of Hargreaves Lansdown."They are facing stubborn inflation enemies and geopolitical risks expanded, especially in the Middle East, shipping delays cannot see the end, and it may push up the price of goods.