No holidays for central banks
The sharp decline in oil prices is putting a lot of pressure on central banks. In Russia, as the growth outlook worsens with the decline in oil prices, the Russian central bank has been forced to raise rates sharply in order to curb the flows out of the ruble. Given this turmoil and the probable upcoming full-scale ECB’s QE, the Swiss National Bank has announced it will introduce negative rates on sight deposit on 22 January, the day the ECB will host its Governing Council. The Riksbank will also look closely at the ECB’s actions as a weaker Euro would cause unwelcome disinflationary pressures in Sweden. In the meantime, the Fed is strongly hinting that the US tightening cycle will start in June.
Read the full report: FX Research