Federal Reserve Pushes Off Rate Hikes

Central banks dominated the news last week, with the Federal Reserve, Bank of Japan, Swiss National Bank and the Bank of England all leaving monetary policies unchanged - with some sending subtle warnings on the upcoming UK referendum vote.

The Federal Reserve left interest rates unchanged at 0.50% as widely expected. Staff Economic Projections showed that some Fed members are still hoping for two rate hikes this year while GDP forecasts were trimmed.

The Bank of Japan's Governor Kuroda did not specify much, but the BoJ voted 8 - 1 to keep policy unchanged. The BoJ Governor touched upon GDP growth, noting that economic expansion was taking place at a moderate pace but that inflation could risk falling to or below zero percent in the near term.

The Swiss National Bank’s statement said that it was not ruling out another cut, to a rate that currently stands at -0.75%. The bank also gave a clear warning to the markets that it was closely monitoring the Brexit referendum and that the it would stand by to intervene in the currency markets if the Franc appreciates too rapidly.

The Bank of England was also unanimous in voting to keep rates steady at 0.50% and said that the risks of a vote to leave the EU could spark domestic and global financial turmoil. The BoE has already drafted contingency plans into the referendum.