middle easten
Central bank watcher: Different worlds

Central bank watcher: Different worlds

20-12-2021 | Insight

Not all global policymakers are in a rush to remove the punch bowl.

  • Martin van Vliet
    van Vliet
    Strategist and member of Robeco’s Global Macro team
  • Rikkert  Scholten
  • Bob Stoutjesdijk

Speed read

  • The Fed is paving the way for rate hikes
  • One down, one to go for the ECB
  • But the PBoC is bucking the trend

The third week of December brought further rate hikes by central banks in Norway, Chile, Mexico, Colombia, Russia, and Hungary. In the same week, the Bank of England also delivered its first pandemic-era rate hike, while the Fed announced it was speeding up the completion of its asset purchase program, paving the way for rate hikes in 2022.

One might receive the impression that global central banks are rushing to exit their loose policies. But that is not the case. In the world’s second largest economy, China, the central bank has recently shifted to a full-fledged easing mode, and in the world’s third largest economy, Japan, the central bank is only stepping away very slightly from a very accommodative policy.

What’s more, while the ECB announced the end of one of its QE programs, PEPP, it still needs to wind down its regular program before rate hikes become imminent. So, while inflation has risen and global supply factors play an important role in this surge, it feels like a different world when it comes to central bank policy responses.

Nevertheless, we don’t foresee a material change or large divergence within the climate for major developed market bond markets. The interconnectedness of these markets and the still-subdued, long-term outlook for DM central bank policy rates suggests that the upward potential for longer-term yields, similar to the past decade, remains modest. More recently, flight-to-safety buying in the wake of the spread of the Omicron variant has helped keep longer-term yields in check.

Outlook for central bank policy rates

Source: Bloomberg, Robeco, change 12m ahead, based on money market futures and forwards
Download the Central Bank Watcher
With our latest analysis of global monetary policy.
Download the full report


Robeco Institutional Asset Management B.V. (DIFC Branch) is regulated by the Dubai Financial Services Authority (“DFSA”) and only deals with Professional Clients and Market Counterparties, and does not deal with Retail Clients as defined by the DFSA.

Neither information nor any opinion expressed on the website constitutes a solicitation, an offer or a recommendation to buy, sell or dispose of any investment, to engage in any other transaction or to provide any investment advice or service. An investment in a Robeco product should only be made after reading the related legal documents such as management regulations, prospectuses, annual and semi-annual reports, which can be all be obtained free of charge at this website and at the Robeco offices in each country where Robeco has a presence.

Please confirm that you are a professional investor and/or institutional investor and that you have read, understood and accept the terms of use for this website.

I Disagree