BNR – Qatar National Bank (QNB) suggested that interest rates would see further hikes in the coming months. Furthermore, the ongoing development slowdown in modern economic powers. This is particularly following the harsh stances witnessed by the monetary policy forum of the European Central Bank (ECB) in Sintra, Portugal.

In a weekly report, QNB projected that the situation would push the three major central banks to follow tight policies. The state of uncertainty surrounding the situation might restrict the US Federal Reserve, the ECB, and the Bank of England. These banks remain focused on re-establishing trust that will go a long way with their financial policies.

Tight Monetary Policies and High Interest Rates Remain

The report states that the vision that high-ranking officials in central banks revealed results in three conclusions. Firstly, although the projections were that these banks will move to a truce stance at the beginning of 2023 and reduce interest rates early, the tight policies were still in place currently for the major central banks.

Additionally, the report notes that modern economic powers have displayed more flexibility than what was projected. This explains the monetary authorities’ persistence in following that route.

The US Federal Reserve chairman, Jerome Powell, asserted that despite the latest halt in increasing interest rates, more hikes might be appropriate. Similarly, Christine Lagarde, President of the European Central Bank, remarked that work is still underway on the interest rates aspect. However, the governor of the Bank of England, Andrew Bailey, maintained a tough position.

Secondly, the report argues that the financial authorities recognised that the acute slowdown is inevitable. They also emphasised that a slight stagnation or a moderate decline will not change its course. Bailey, however, kept the previous recession projections, along with the Bank of England’s tough position on the tightening monetary policy.

Thirdly, the Bank of Japan took a completely different position from other central banks. Its governor, Kazuo Ueda, has indicated that despite rising core inflation, core price pressure indicators such as wage growth are still insufficiently aligned with the Bank’s long-term inflation target for Japan, predicting a short-term decline in its rates, followed by a rise next year.