Central banks call for patience

After the ECB, which regretted that the market had gotten too carried away by reflecting expectations of rate hikes as early as late 2022, it was the turn of the Fed and the BoE to reframe the market. The Fed clearly dissociated tapering from rate hikes, which Jerome Powell said would not happen until the job market has improved further. The BoE disappointed the market’s very high expectations, which reflected expectations of a rate hike in November. The BoE has warned that it will raise its key rates in the coming months given the inflationary pressures, but only if the economic environment lends itself to such hikes. Such cautious statements by central bankers led to a sharp easing of US, EU and UK long-term interest rates and a continued rise in equity markets to new highs.