The Bank of England Delivered a Historic Rate Hike Despite Impending Recession
The central bank raised rated by 75 basis points, its largest move in thirty-three years, but softened its language as it expects prolonged recession
Page 17 of 53
The central bank raised rated by 75 basis points, its largest move in thirty-three years, but softened its language as it expects prolonged recession
A policy rate above neutral is, in effect, a contractionary monetary policy. Given that the Fed may only have just hit neutral, the Fed's hawkishness is understandable. Chair Powell admitted as such, saying that "the level of interest rates will...be higher than previously expected."
The US Federal Reserve delivered another 75 bps rate increase and pointed to a moderation in the pace of tightening, but ruled out a pause, sparking two-way action and volatility in markets
Australian CPI Inflation climbed to the highest levels since 1990 in the third quarter of the year (y/y), helping AUD/USD extend Tuesday’s advance
Oil prices are subdued at the start of this week, unable to get a lift from Monday’s strong Q3 GDP from the world’s second largest consumer
After a tumultuous week and U-turns from the British government, the newly appointed finance minister, announced further changes to the fiscal plans
Yesterday's CPI print surprised to the upside. Headline CPI came in at 8.2% y/y against an expectation of 8.1% y/y. However, core CPI is up 6.6% from a year ago. This print matched the previous release and is the fastest rate of change since 1982.
The real rate uptrend remains valid, and the upward green trendline defines its momentum. In this vein, a pullback to test this momentum will be compelling, given the Fed's current aggressive monetary policy. As such, and until proven otherwise, a dip in the yield uptrend remains our preferred scenario.
Australia’s central bank raised interest rates again today, but the 0.25% move was smaller than expected and constituted a step back from the larger hikes in the previous four meeting
Core PCE, the Fed's preferred inflation measure, exceeded the 4.7% YoY forecast, printing at 4.9%. However, on a month-on-month basis, it was 0.6% against the 0.5% expected. Food and energy prices are excluded from the core number, implying that aggregate demand hasn't adjusted as expected for the Fed's current hiking cycle.
This month and especially the current week, have been intense in terms of central bank activity, with historic rate hikes to contain inflation, in spite of rising fears of recession
Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.