In this issue of 9 May 2023: the editorial of William De Vijlder “When will the Federal Reserve stop tightening? Insights from previous cycles”, the credit impulse in the Eurozone, the latest market overview and the economic scenario.
In his latest press conference, Federal Reserve Chair Powell argued that monetary policy might already be sufficiently restrictive. In future decisions, economic data will be particularly important but this does not imply that the latest data are the only thing that matters. The delayed effects of past rate hikes need to be taken into account, considering that they will only show up in the data published over the following months. This is why in past tightening cycles, the Fed has tended to stop hiking rates although the pace of job creation was still rather healthy and well before the unemployment rate picked up significantly
Already noticeable in Q4 2022, the effects of monetary policy tightening on the distribution of bank credit in the eurozone intensified significantly in Q1 2023.
GDP growth, inflation, interest rates and exchange rates
