🌍 Rates aren't falling (yet)

Plus: Milei flies commercial to Davos

Hi Intriguer. One of my favourite books is the Pulitzer prize-winning Lords of Finance, about the world’s four main central bank chiefs in the 1920s and their efforts to save the global economy.

The true tale follows how the foibles, orthodoxies, and best efforts of these four men still helped drag us all into the Great Depression.

Today’s briefing leads with an update on the dilemmas facing modern central bankers. And having met some of these folks myself, I can’t help but wonder what history might say about their foibles, their orthodoxies, and where they might be taking us all next.

- Jeremy Dicker, Managing Editor

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Iran strikes Pakistani targets. Iran says it’s hit militant targets over the border in western Pakistan, in what is Iran’s third airstrike on another country this week (after hitting sites in Iraq and Syria). Pakistani officials decried the strike (which reportedly killed two children) and warned of “serious consequences”.

Israel and Hamas agree to limited aid deal. The agreement, mediated by Qatar and France, will allow two planes filled with medicine and other aid into Gaza in return for medical assistance to Israeli hostages being held by Hamas. Separately, the leaders of the World Food Programme, UNICEF, and the World Health Organization also released a joint statement calling for more aid.

Back on the blacklist. The Biden Administration is reportedly poised to re-designate the Houthis as a terrorist group in light of ongoing Houthi attacks on Red Sea shipping. Washington delisted the group in 2021 to facilitate humanitarian deliveries into Yemen. The US hit more Houthi targets yesterday (Tuesday).

New numbers from China. The Chinese economy grew by 5.2% in 2023, according to new data published by the National Bureau of Statistics earlier today. The data also indicates that the country’s population shrank for the second straight year, adding to concerns about China’s long-term growth.

Apple surpasses Samsung. Apple became the biggest manufacturer of smartphones last year, surpassing Samsung in phone shipments for the first time.


Central Banks aren’t in a hurry to cut interest rates

Robert Holzmann, the head of Austria’s central bank and a member of the European Central Bank (ECB) governing council, has warned not to expect rate cuts any time soon, saying “we should not bank on the rate cut at all for 2024”.

Higher interest rates raise the cost of borrowing, meaning folks spend less and businesses invest less. But that means higher rates also help curb inflation, which has been cooling in Europe and inspiring traders to bet on six ECB cuts this year.

So Holzmann is saying one thing (no cuts) and the markets, another (lots of cuts).

Who’s right? Either way, we know Holzmann isn’t alone:

  • Last month, US Federal Reserve Chair Jerome Powell labelled forecasts of imminent rate cuts “premature”, and new research from Morgan Stanley backs him up

  • On Monday, the People’s Bank of China defied expectations of a cut, instead keeping a key rate flat

  • And yesterday, South African Reserve Bank head Lesetja Kganyago told Bloomberg, “we are going to have to keep rates higher for longer”.

So what’s going on? There are different - and often intertwined - factors at play: 

  • Stability: Some central bankers (like China’s) seem mindful of local bank profitability and stability, which can wobble if rates drop too quickly

  • Inflation: Others are more focussed on price rises, which are cooling but still above most key central bank targets

  • Bubbles: Some advanced economies are still wary of how cuts can lower the costs of risky investments (which can in turn lead to asset bubbles)

  • Currencies: Emerging markets are wary of cutting rates before the Fed, to avoid collapsing their currencies as investors chase higher US returns

  • Signalling: Central bankers are also using words (“no rate cuts!”) to curb inflation, hoping folks tighten their belts in response. But of course… some traders are calling their bluff and betting banks will cut anyway.

So here we are, with rates still higher than many folks expected (or wanted).

One of our favourite central bankers, Agustín Carstens at the Bank of International Settlements, has warned things might look this way “indefinitely”.

Meanwhile, just hours ago, the ECB chief herself (Christine Lagarde) shared her view that the ECB will “likely” cut rates this (northern) summer. 🤷


Who’d want to be a central banker? You’re piloting a plane, but the controls take months to work (if at all), and we’re all onboard.

The toughest gig of all right now might be that of China’s central bank chief, Pan Gongsheng. In the good times, China was exceptional with its decades of double-digit growth. But as its economic challenges keep mounting, it’s becoming exceptional in other ways.

One possible comparison is with Japan, which entered a period of stagnation after its own property crash in 1990. But Japan’s population kept growing for two more decades afterwards, cushioning the blow, whereas China’s huge population has now started declining at the same time as its property crisis.

And nobody (including central bank chief Dr Pan) knows how that kind of double-whammy might play out.

Also worth noting:

  • The ECB is currently holding rates at a record high of 4%, while the Fed is keeping its rates at 5.25-5.5%, its highest level since 2007


What do people in Congress, executives on Wall Street, and UN Ambassadors all have in common?

They read Principals, a totally free political newsletter by Semafor, delivering distilled yet insightful quips into Washington’s halls of power.


  1. 🇰🇵 North Korea: Supreme Leader Kim Jong Un has unexpectedly moved to drop Korean reunification as an aim in North Korea’s constitution. He also described North-South ties as “no longer a relationship of kinship or homogeneity, but a relationship of two hostile countries”. 

  2. 🇩🇪 Germany: Thousands of tractors blocked the streets of Berlin on Monday as farmers protested government plans to phase out agricultural fuel subsidies. Berlin is preparing the country for new austerity measures after a court ruling blew a €20B hole in its budget. 

  3. 🇦🇺 Australia: Australia has rejected Taiwan’s reported claims that Nauru switched its diplomatic recognition from Taiwan to China because of an asylum centre funding gap left by Canberra. Australia says Nauru gave it a heads-up before the small Pacific Island cut ties with Taiwan. 

  4. 🇨🇦 Canada: The immigration minister is pushing to cap the number of foreign students admitted into Canada, to tackle a persistent housing crisis. Rent has gone up 22% in the last two years, while almost a million foreign students were admitted to Canadian schools last year. 

  5. 🇰🇲 Comoros: Electoral authorities announced overnight that President Azali Assoumani has won a new five-year term leading the African archipelago of the Comoros. Sunday’s election was marred by allegations of fraud and irregularities, with voter turnout at 16.3%.

¿Hablas español? ¡Check out Intrigue’s weekly edition in Spanish!


Passengers on a Lufthansa flight were startled yesterday (Tuesday) when Argentina’s new president boarded, just like everyone else. Flying to Davos with a small entourage, Milei happily posed for selfies and chatted with passengers, retweeting the above pic with an explanation of his cost-saving flight.

His Davos program will include a meeting with the head of the IMF, to which Argentina owes a record $44B.


Forecasting is notoriously tricky business, but it's fun. When do you think the Fed will start cutting interest rates?

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Yesterday’s poll: Do you or someone you know use Starlink's internet service?

🟨⬜️⬜️⬜️⬜️⬜️ 💻 Yes, it's going ... (write in!) (20%)

🟩🟩🟩🟩🟩🟩 🙅 Nope (79%)

⬜️⬜️⬜️⬜️⬜️⬜️ ✍️ Other (write in!) (1%)

Your two cents:

  • 💻 M.B: “Starlink has proved to be a reliable safety feature for us maritime workers and sailors. We’re now able to coordinate record-time rescues in the Pacific and elsewhere thanks to Starlink uploading last known coordinates.”

  • ✍️ K.M: “It provided surprisingly good coverage while I was in Antarctica, but I have some concerns about LEO satellites disrupting dark night skies and the implications for astronomy.”

  • 💻 L: “If it's cloudy, service isn't reliable.”

And thanks to all of you writing in from rural Australia, Canada, Chile, USA, Mexico, New Zealand, Guatemala, and beyond!


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