Robeco logo

Disclaimer

BY CLICKING ON “I AGREE”, I DECLARE I AM A WHOLESALE CLIENT AS DEFINED IN THE CORPORATIONS ACT 2001.

What is a Wholesale Client?
A person or entity is a “wholesale client” if they satisfy the requirements of section 761G of the Corporations Act.
This commonly includes a person or entity:

  • who holds an Australian Financial Services License

  • who has or controls at least $10 million (and may include funds held by an associate or under a trust that the person manages)

  • that is a body regulated by APRA other than a trustee of:
    (i) a superannuation fund;
    (ii) an approved deposit fund;
    (iii) a pooled superannuation trust; or
    (iv) a public sector superannuation scheme.
    within the meaning of the Superannuation Industry (Supervision) Act 1993

  • that is a body registered under the Financial Corporations Act 1974.

  • that is a trustee of:
    (i) a superannuation fund; or
    (ii) an approved deposit fund; or
    (iii) a pooled superannuation trust; or
    (iv) a public sector superannuation scheme
    within the meaning of the Superannuation Industry (Supervision) Act 1993 and the fund, trust or scheme has net assets of at least $10 million.

  • that is a listed entity or a related body corporate of a listed entity

  • that is an exempt public authority

  • that is a body corporate, or an unincorporated body, that:
    (i) carries on a business of investment in financial products, interests in land or other investments; and
    (ii) for those purposes, invests funds received (directly or indirectly) following an offer or invitation to the public, within the meaning of section 82 of the Corporations Act 2001, the terms of which provided for the funds subscribed to be invested for those purposes.

  • that is a foreign entity which, if established or incorporated in Australia, would be covered by one of the preceding paragraphs.


I Disagree

12-02-2024 · Insight

Central bank watcher: One way or another

In our view, rate cuts are coming – one way or another. They will come more quickly if a financial accident or sharp growth slowdown does occur, and more slowly if further disinflation, which we expect, allows central banks to trim the restrictiveness of their policy stance.

Download the full report


    Authors

  • Martin van Vliet - Strategist

    Martin van Vliet

    Strategist

  • Rikkert Scholten - Strategist

    Rikkert Scholten

    Strategist

Summary

  1. The Fed’s rate cuts are expected to blossom by spring’s end

  2. Last mile musings for the ECB

  3. The PBoC is under pressure

Behind the curve on the way up, DM central banks are understandably cautious in starting the descent from higher policy rates. This is particularly true given the challenges posed in the last mile of bringing down inflation, with labor markets remaining relatively tight and concerns about an impending (or deepening) economic malaise having shifted to the background. On balance, we agree with the current market pricing for (late) Q2, when we expect the first Fed and ECB rate cut to be delivered.

In assessing bond market valuations, the exact timing of the first rate cut is less important than the trajectory of rates over the next few years. Although we agree that in a looser fiscal policy regime central bank rates are likely to settle at higher levels than before the pandemic, we have started to see markets overdoing it (as in Q3 last year). Specifically they have priced in terminal rate levels that are ‘too high.’

Meanwhile, in China, the weak growth and low inflation backdrop piles pressure on the PBoC to ease further. Further rate cuts have indeed become more likely, though we expect balance sheet tools to continue to do the heavy lifting. In Japan, the BoJ remains on a gradual course towards tighter policy. Indeed, one way or another, negative policy rates look set to disappear this year.

Figure 1 – Outlook for central banks’ policy rates

Figure  1 – Outlook for central banks’ policy rates

Source: Bloomberg, Robeco, change by end 2024, based on money market futures and forwards; 9 February 2024

Get the latest insights

Subscribe to our newsletter for investment updates and expert analysis.

Read more
Robeco

Robeco aims to enable its clients to achieve their financial and sustainability goals by providing superior investment returns and solutions.

Important information: This website is prepared and issued in Australia by Robeco Hong Kong Limited (ARBN 156 512 659) (‘Robeco’) which is exempt from the requirement to hold an Australian financial services licence under the Corporations Act 2001 (Cth) pursuant to ASIC Class Order 03/1103. Robeco is regulated by the Securities and Futures Commission under the laws of Hong Kong and those laws may differ from Australian laws. The information on this web page is provided to you because Robeco reasonably believes that you are a "wholesale client" within the meaning of that term under section 761G(4) of the Corporations Act 2001 (Cth) ("Corporations Act") and not any other class of persons. This information is not an advertisement and is not intended to induce retail clients to acquire Robeco products. Retail clients who are interested in Robeco products should contact their financial adviser.