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Gold after 5 Central Banks


The FOMC, ECB, BoE, SNB and Norges Bank are out of the way, leaving the markets digesting the tightening announcements as we move to the year’s end.

As expected, the BoE, ECB, and SNB all gave a 50 bp rate increase. The Norges Bank was the only exception, increasing its policy rate by 25 bp. ECB The deposit rate was set at 2.00% and main refi at 2.50%. It is stressed that rates must continue to rise at a steady rate. The ECB will not reinvest bonds from the APP program. In Q2, the APP portfolio will fall an average EUR 15 bln per month. QT will begin and there will be more rate increases. The inflation forecast for 2023 has been raised to 6.3% from 5.5%.

ECB rates to turn restrictive – QT to start. The central bank may have slowed down the pace of tightening moves, but the statement made very clear that this is not a sign that rates are anywhere close to the peak and that there will have to be further “significant” tightening to bring rates to a restrictive level, in order to dampen demand and thus help to bring inflation down. The ECB now faces a recession but must still tighten its policy. QT will eventually start, but initially it will be at…

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