SGOV - Monetary Policy Madness: Will Central Banks' Strategies Be Successful?

2024-03-13 12:30:00 ET

Summary

• The Bank of Canada is reluctant to be a first mover on rate cuts and remains anxious about inflation, despite a loosening labor market.
• ECB President Christine Lagarde said the bank is making good progress toward its inflation target and is feeling more confident, but it will know a lot more in June.
• The Fed will no doubt keep rates static this month, but change is in the air as Fed Chair Jay Powell recently suggested that rate cuts are coming soon.

It’s March, and for many of us in the US (and for some around the world), this month is most notable for being college basketball championship season. We’re about to witness the culmination of hard work, sacrifice, and strategic vision that has been years in the making for these student-athletes.

I can’t help but draw comparisons to central banks, and how investors are closely watching them this month for signs that central bankers believe they have seen enough success in achieving their goals and will soon be ready to change their policies.

The matchup: Central banks vs. inflation

Today’s monetary policy “season” began in 2022, when central bankers in Western developed economies started hiking rates to combat inflation; it’s taken them years to get where they are today....

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