Global Central Banks Move to Ease Credit Conditions

March 20, 2023

Global Central Banks Move to Ease Credit Conditions Photo

After a tumultuous week across the financial markets and rapidly growing fears about the global banking system, the Swiss government stepped in to orchestrate and support the rescue of Credit Suisse. Over the weekend, global central bankers also moved quickly to improve liquidity conditions. The Federal Reserve (Fed) and five other central banks are taking a coordinated action to "ease strains in global funding markets, thereby helping to mitigate the effects of such strains on the supply of credit to households and businesses.”1

Economic releases this week will take a back seat to another Fed interest rate decision out Wednesday. Markets are pricing in almost even odds of a 25-basis-point rate hike or no change in rates.2 The primary question being debated now is can the Fed separate its ongoing battle to contain inflation from its role to support the banking system and maintain financial market stability. I continue to lean toward the Fed holding rates steady as the stresses being felt in the banking system are closely tied to the Fed’s aggressive monetary tightening over the past 12 months.   



1Source: Board of Governors of the Federal Reserve System- Coordinated Central Bank Action to Enhance the Provision of U.S. Dollar Liquidity; 3/19/23  

2Source: MarketWatch- U.S. Economic Calendar; as of 3/20/23

Tags: Banks | Federal Reserve | Interest rates | FOMC | Inflation

< Go to Monday Morning Perspectives

This blog post is for informational use only. The views expressed are those of the author(s), and do not necessarily reflect the views of Penn Mutual Asset Management. This material is not intended to be relied upon as a forecast, research or investment advice, and it is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy.

Any statements about financial and company performance of The Penn Mutual Life Insurance Company or its insurance subsidiaries (each, “Client”) made by the author is provided with a written consent from the Client.  Penn Mutual Asset Management is a wholly owned subsidiary of The Penn Mutual Life Insurance Company.

Opinions and statements of financial market trends that are based on current market conditions constitute judgment of the author and are subject to change without notice.  The information and opinions contained in this material are derived from sources deemed to be reliable but should not be assumed to be accurate or complete.  Statements that reflect projections or expectations of future financial or economic performance of the markets may be considered forward-looking statements.  Actual results may differ significantly.  Any forecasts contained in this material are based on various estimates and assumptions, and there can be no assurance that such estimates or assumptions will prove accurate.

Investing involves risk, including possible loss of principal.  Past performance is no guarantee of future results.  All information referenced in preparation of this material has been obtained from sources believed to be reliable, but accuracy and completeness are not guaranteed. There is no representation or warranty as to the accuracy of the information and Penn Mutual Asset Management shall have no liability for decisions based upon such information.

High-Yield bonds are subject to greater fluctuations in value and risk of loss of income and principal. Investing in higher yielding, lower rated corporate bonds have a greater risk of price fluctuations and loss of principal and income than U.S. Treasury bonds and bills. Government securities offer a higher degree of safety and are guaranteed as to the timely payment of principal and interest if held to maturity.

All trademarks are the property of their respective owners. This material may not be reproduced in whole or in part in any form, or referred to in any other publication, without express written permission.

Subscribe to Our Publications