Bitcoiners may want to pay close attention to the major bank stress test which is set to take place next week. All of the central banks in the world will participate in this test, and the outcome is anybody’s guess at this stage. It is possible the majority of banks will continue down the same path of not taking any concrete action as a result of the Brexit.
Another Stress Test For Global Banks
Although very few people expect the banks to take any actions, the Federal Reserve may be the one big exception to this rule. The way things look right now seem to indicate the Fed will not be able to keep its interest rates on hold for much longer. That is only normal, as the institution wants to avoid previous mistakes of hyping rate hike expectations.
The Brexit outcome seems to have had less of an impact compared to what financial experts had predicted at first. Despite that outlook, the Fed had announced a total of four rate hikes in the year 2016. That prospect had to be corrected, and it is possible there will only one interest increase for the entire year. Then again, it is not a negative change, which is the best anyone can hope for right now.
Commerzbank provided the world with a small quote on what is to be expected:
“As the outlook up to mid-September will presumably not be clear enough by then, the next rate hike is more likely to happen in December in our opinion, followed by two further steps in the coming year. Consequently, we predict a somewhat stronger dollar and slightly higher yields in the medium term.”
Other banks around the world are facing bigger problems, though. The Bank of Japan is dealing with very low inflation, and they may be forced to go into monetary easing. However, if a small forecast cut would take place, they may get away with stagnation for the time being. The Japanese Yen needs to be controlled, as its bullish trend is a threat to the country’s economy.
Europe, on the other hand, is a different cookie altogether. The banking stress test results will be released on Friday, and the center of focus will be the Italian banks. It is important to keep in mind this test will only give insights as to what type of solution is needed to solve any lingering problems. The ECB will intervene if necessary, although no specific details are known regarding what they may have planned.
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