Global central bankers convene in Sintra tonight, with Fed Chair Walsh’s “international debut” as the biggest highlight

At 21:00 Beijing time tonight (some reports say 21:30), the European Central Bank Central Banking Forum—often described as the “European version of the global central bank annual meeting”—will bring its main event to Sintra, Portugal. Federal Reserve Chair Walsh, European Central Bank President Lagarde, Bank of England Governor Bailey, and Bank of Canada Governor Macklem will all join a “policy panel” discussion.

This is Walsh’s first public overseas appearance since he took office as Fed Chair in May this year. The market hopes he will “spell out his thinking,” but it is unlikely to go as expected—Walsh has already made it clear that he opposes excessive “forward guidance” in normal circumstances, arguing that investors should make their own judgments based on economic fundamentals. At his first policy press conference in mid-June, he said plainly: “I can’t provide any forward guidance on what our next actions will be.” Analysts expect he is more likely to disclose his judgment logic through a macro framework rather than provide a clear interest-rate path.

With current U.S. core PCE up to 3.4%, the highest level since October 2023, the market will closely watch how Walsh breaks down the components of inflation and whether he will continue the hawkish stance taken at the June meeting. Some believe Walsh is trying to push down long-term U.S. Treasury yields through tough-sounding statements, thereby reducing borrowing costs.

Notably, all four central bank leaders have lived through the 2008 global financial crisis. At the time, Walsh—then a Fed governor—took part in designing the bank bailout program, Lagarde was France’s finance minister, Bailey helped orchestrate the bank bailout at the Bank of England, and Macklem was involved in international crisis coordination at Canada’s Ministry of Finance. Today, they face new challenges such as inflation that keeps resurfacing, AI bubble risks, and uncertainty in geopolitics. Macroeconomists note that the discussion may go far beyond inflation, focusing on how central banks can promote innovation while managing financial stability risks.

In her opening remarks at the forum, Lagarde defended this month’s rate hike, calling it a “deliberately robust decision.” Overall, tonight’s speeches may not provide a clear direction—the real pricing switch may be on Thursday’s non-farm payroll data. Before that, the scenario of a stronger dollar and downward pressure on gold is likely to persist.
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