{"id":58824,"date":"2023-03-28T11:32:02","date_gmt":"2023-03-28T08:32:02","guid":{"rendered":"https:\/\/ironfx-com-php8.wp-dev.int.theitops.net\/?p=58824"},"modified":"2025-10-14T15:11:46","modified_gmt":"2025-10-14T12:11:46","slug":"inflation-or-financial-stability-which-will-come-out-on-top-of-the-tug-of-war","status":"publish","type":"post","link":"https:\/\/www.ironfx-id.com\/id\/inflation-or-financial-stability-which-will-come-out-on-top-of-the-tug-of-war\/","title":{"rendered":"Inflation or Financial stability, which will come out on top of the tug of war"},"content":{"rendered":"

GBP was on the rise against the USD yesterday and on the monetary front, BoE\u2019s Bailley\u2019s speech was hawkish in nature given the fact that he stated \u201cwhat monetary policy can \u2013 and must \u2013 do is to make sure that the inflation that has come to us from abroad does not become lasting inflation generated at home\u201d. This could be perceived as an indication to the intentions of BoE when they are meeting again on the 11th of May, opening the door to potential further hikes. This could in turn strengthen the GBP as BoE\u2019s monetary policy seems to continue to tighten. Across the channel, EUR edged higher ECB\u2019s Schnabel yesterday implied that the Fed\u2019s liquidity services may not be up to par with reality as \u201cAs not all financial market participants have access to the Federal Reserve\u2019s balance sheet, the floor might be \u201cleaky\u201d\u201d therefore this inequality could potentially result in cracks in the financial industry that may not be visible to the public eye or even the government regulators until it is too late. The statement maintains the market uncertainty and thus we highlight comments of ECB policymakers later today. We should also note that Germany\u2019s IFO expectations for March came in much stronger than expected despite the paradox of German workers staging strikes since the beginning of March. This could have negatively impacted the IFO, however it would appear that the German Business leaders have faith in the resilience of Germany\u2019s economy in the long run and remained unphased by temporary setbacks. This could potentially positively affect the EUR given that Germany is the largest economy in the Eurozone. Following on the IFO releases ECB\u2019s Nagel stated according to Bloomberg \u201cIt\u2019s becoming ever more important to decide on further monetary-policy steps from meeting to meeting considering economic and financial developments,\u201d thus repeating the rhetoric from ECB\u2019s Lagarde and other policy makers that the ECB will decide on a meeting by meeting basis if there will be any interest rate hike, cut or the option to remain at current levels based on current market conditions. The difference between Schnabel\u2019s and Nagel\u2019s speeches are slightly different however with two combined it could be possible that the ECB may foresee further economic uncertainty in the market and as such is preparing in advance. Despite ECB\u2019s main target being the curbing of inflationary pressures in the Eurozone, the recent social upheaval in France and Germany in combination with the uncertainty in the banking sector may force the bank to ease its aggressive hawkish stance which in turn could weaken EUR. US stock market sent mixed signals, yet we note that Lockheed Martin was awarded a $474.2M contract to continue its previous Trident II missile production for the UK, which may have a bullish effect on its share price. Furthermore, we note the Walt Disney announcement to fire 7,000 employees this coming after Florida Governor Ron DeSantis announced that Disney would lose its special status.<\/p>\n\n\n\n

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