Here's What You Can Expect From The Central Banks This Week

Prattle is a text analysis company that uses proprietary algorithms to provide weekly research on central bank communications. This is a reprinted version of their Macrocast, originally published on their blog.

Prattle's models are based on the historical relationship between central bank language and market reaction, which is used as basis of evaluation for future communications. The scores are normalized around zero and range between -2 and 2, negative numbers indicating dovishness and positive numbers indicating hawkishness.

Bank of England

Forecast: Likely to hold rates on September 15
Analysis: With a rising trend* (momentum** 0.25) since initiating stimulus in early August, we expect the BOE to hold rates this week to continue evaluating the effects of the existing stimulus.

Federal Reserve

Forecast: Speakers to trend moderate
Analysis: Three Fed speakers spoke on Monday, expressing moderate sentiment, diminishing the odds of a September rate hike ahead of the Fed’s media blackout beginning on this morning. Kashkari’s recent speeches have focused on Too Big To Fail, so he is the least likely to wade into monetary policy. Lockhart is more likely to discuss policy, and, although he’s trending dovish, we anticipate he will deliver a more moderate (less dovish) speech. We expect Lael Brainard–increasingly speculated to be a possible Clinton appointee for Treasury Secretary–to deliver an uncontroversial, moderate speech pointing to the possibility of a rate hike later this year, consistent with the Fed’s slightly hawkish current stance (momentum 0.05).

European Central Bank

Forecast: Speakers to trend hawkish

Analysis: We expect Mario Draghi and Sabine Lautenschlager of the ECB, both speaking on September 13, to deliver moderately hawkish speeches consistent with the ECB’s rising sentiment trend (momentum 0.25).

Reserve Bank of Australia

Forecast: Likely to continue cautious language
Analysis: RBA policymakers Guy Debelle and Christopher Kent are set to deliver slightly dovish speeches reflecting the RBA’s current momentum of -0.31 and perpetuating the bank’s moderately dovish trend.

Bank of Canada

Forecast: To trend neutral
Analysis: After a very quiet summer, we expect BOC Senior Deputy Governor Carolyn Wilkins’ speech this week to maintain the bank’s slightly above neutral (momentum 0.08) trend.

Swedish Riksbank

Forecast: To trend modestly hawkish

Analysis: Due to her tendency to stay on track with the Riksbank’s aggregate trend, Cecilia Skingsley’s speech this week will likely echo the bank’s modestly hawkish posture (momentum 0.29).

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