Tag Archives: Fed meeting

Federal Reserve’s first meeting of 2023

Federal Reserve’s first meeting of 2023, the Federal Reserve announced a 25-basis point increase in its benchmark interest rate.

 

Topics

US Federal Reserve’s Base Rate
Chairman Jerome Powell
Bank of England and European Central Bank

 

 

 

 

 

US Federal Reserve’s Base Rate

 

This marks the slowest pace of increases since last March and is a sign that inflationary pressures are beginning to ease. 

The Fed had been aggressively raising rates over the past year to quell rising inflation,
but recent data has shown that prices have begun to stabilize,
and economic activity has cooled off significantly from previous highs.

 

This change in stance could be seen as an indication of confidence
from policymakers that their efforts are having a positive effect
on both price stability and overall economic growth.

The move will also likely help support consumer spending
by keeping borrowing costs low for households across America. 

 

It’s important to note, however, that this latest decision does not necessarily mean
we can expect fewer rate hikes going forward; rather it shows us how quickly monetary policy
can shift depending on changing conditions within our economy
something investors should keep top of mind when making decisions about their portfolios moving forward.

 

 

 

 

 

Chairman Jerome Powell

 

Recently, Federal Reserve Chairman Jerome Powell made a statement
that the full force of rate rises has yet to be felt in the economy
and there is still “more to do”. This came as part of an address given
by Mr. Powell at a meeting with U.S. central bankers where he discussed economic policy
and the current state of inflation rates in America.

 

Mr. Powell went on to explain that while inflation has been rising steadily over recent months,
it would need substantially more evidence before any further action
could be taken regarding monetary policy decisions such as interest rate hikes or cuts
which are key indicators for how well an economy is performing overall.

 

He also said that shifting from faster-paced rate increases toward slower ones
will allow them better assess progress toward their goals for economic growth and stability across America’s markets.

 

This announcement comes after weeks of speculation
about whether we can expect further changes in terms of interest rates this year;
investors had previously expected multiple hikes but now appear less certain
due to mixed signals coming from both sides.

 

President Trump has called out against policies increasing borrowing costs
while other members of his administration have openly endorsed them instead.

It remains unclear what exactly will happen next, but one thing is clear:

The Federal Reserve under Chairman Jerome Powel looks set on taking its time
when it comes to making crucial decisions around monetary policy going forward!

 

 

 

 

 

Bank of England and European Central Bank

 

The Bank of England and the European Central Bank are both expected
to raise borrowing costs by 50 basis points tomorrow in a move
that could signal an end to rate rises later this year.

This news has been welcomed by investors,
who has long been anticipating such action from the two major central banks?

 

The decision comes as global economic growth continues to recover
from the pandemic-induced recession last year, with both Europe and the UK showing signs of improvement.

The US economy is also on track for a strong rebound this year due to falling energy prices,
China’s reopening, and weakening dollar values which have provided exporters with a boost.

 

Despite these positive developments, many analysts remain cautious
about raising rates too quickly or prematurely given that inflation remains low across most economies
including those in Europe and Britain
while unemployment levels remain high despite recent declines since 2020 began.

 

Therefore, it appears likely that any further hikes will be gradual rather than
aggressive over the coming months as policymakers look at other factors
before deciding whether or not more stimulus is needed. 

In conclusion, tomorrow’s announcement may well prove beneficial for the markets
if it signals an end rate rises later this season, but investors should still exercise caution
when making decisions based on short-term movements in interest rates alone.

 

 

The Fed’s Final Rate Hike

The Fed’s Final Rate Hike, On Wednesday, Federal Reserve Chair Jerome Powell took an aggressive stance at the podium and effectively said that the central bank isn’t done hiking rates.

 

Topics
Powell’s Pivot
How Investors are dealing with higher volatility
The Fed’s Path to Certainty
A Hard Landing for the US Economy

 

 

 

 

 

 

Powell’s Pivot

 

This is a stark contrast to what many in the markets have been expecting lately,
that there would be a so-called Fed pivot soon.

It appears this will not be happening anytime soon, as Powell made it clear that he believes further rate hikes
are necessary for continued economic growth and stability.
The Fed’s decision to keep raising rates has sent shockwaves through financial markets,
with stocks falling sharply on Wednesday following his comments.

 

The reaction from investors was swift; however, many analysts believe these moves
may simply represent short-term volatility rather than long-term shifts in sentiment
or outlooks on monetary policy going forward.
It remains uncertain how far along into 2019 we can expect rate hikes before any sort of pause occurs,
but one thing is certain: if you’re looking for yield right now then you should look elsewhere
because interest rates aren’t likely coming down anytime soon!

 

Powell’s statement serves as yet another reminder of why it pays off to stay informed
about key economic indicators like inflation levels and employment numbers when making decisions about your investments;
after all, knowledge really is power! So don’t forget to do your research
before jumping into any new investment opportunities,
especially ones involving fixed-income assets like bonds
or CDs which are more sensitive to changes in interest rates than other asset classes such as equities or commodities.

 

 

How Investors are dealing with higher volatility

 

Powell was hawkish up and down the line. In other words,
he wasn’t backing down from his stance on monetary policy despite what the market wanted to hear.

 

This has caused quite an uproar in markets across the globe as investors are struggling
to make sense of this new reality where central banks aren’t playing by their traditional rules anymore.

Investors were hoping for some sort of pivot from Powell but instead,
they got more hawkishness which has made them wary about investing further
into stocks or bonds due to fears that inflation could be around the corner if interest rates stay too low for too long.

 

It’s clear that there is no easy answer here – investors can either take their chances with higher volatility or wait out until something changes at The Fed before making any big moves with their money. Either way, it looks like we’re going through some turbulent times ahead as markets try to adjust themselves accordingly while still trying to grapple with these unpredictable policies coming out of Washington DC!

 

 

 

The Fed’s Path to Certainty

 

The markets seemed to remain relatively flat following Fed Chair Jerome Powell’s speech this week. This could be seen as a sign that investors are set on a particular narrative, and they’re not interested in being swayed by any new information.
For the most part, it appears that the market is comfortable with its current trajectory and has no interest in taking risks or making large moves based on what was said during Powell’s address. The fact that there wasn’t much of an immediate reaction suggests people feel confident about where things are headed for now at least.

 

This stability is good news for investors who want to avoid volatility when investing their money, but it also indicates something else: certainty from the Federal Reserve regarding future monetary policy decisions and economic outlooks. Wright sees this as positive because it means people have more faith in what will happen next — which can give them peace of mind when making long-term investments or financial plans going forward into 2021 and beyond.
In short, while markets may have remained relatively flat through Powell’s speech, suggesting investor confidence isn’t easily swayed, Wright believes this steadiness should be viewed positively since it implies growing certainty surrounding Fed policies moving forward; ultimately giving everyone involved greater clarity over their own investment strategies.

 

 

A Hard Landing for the US Economy

 

The Federal Reserve has been watching the US economy closely, but it appears their predictions may be off. Even if markets seem to think otherwise, longtime Fed watcher Wright said he believes that a hard landing for the US economy is unavoidable.
This is an alarming thought given how well assets have been performing lately and how this could lead to further economic stimulation. Powell noted yesterday that unemployment most likely needs to increase before we can see any real cooling of our current economic situation – however with markets doing so well, businesses are unlikely to want or need to let go of employees for this decrease in employment rate to happen.

It’s clear then that there’s still much uncertainty surrounding what will actually happen with the US economy going forward and whether or not a hard landing is inevitable despite market optimism at present time – something which no doubt worries many investors out there too! We must hope then that some kind of solution can be found which allows us all to avoid such an outcome as best as possible; only time will tell on this one though.

But the more the market ignores the Fed, the longer the Fed will have to keep monetary policy restrictive, which ultimately raises the odds of a recession.
“Markets are pretty confident that we will get inflation under control, ” Powell said Wednesday, adding that Fed governors aren’t considering an adjustment to the 2% inflation target. “We’re certainly highly confident we can do that.”

 

 

 

Fed’s Interest rate impact

Fed’s Interest rate impact

 

Fed’s Interest rate impact, The Federal Reserve’s recent series of interest rate
hikes have delivered a substantial increase in the cost of living for more than a few Americans.
That’s at odds with the institution’s stated goals.

 

Topics

The Impact of the Consumer Price Index
The CPI: Incomplete
The Pros and Cons of Inflation

 

 

 

 

 

The Impact of the Consumer Price Index

 

Fed’s Interest rate impact is tasked with maintaining price stability,

promoting maximum employment, and fostering financial conditions that facilitate economic growth.
But its recent actions seem to be working against those objectives,

by raising rates, the Fed has made it more expensive for consumers to borrow money and

has put upward pressure on prices across the economy.

That may be good news for savers and investors,

but it’s bad news for everyone else who is struggling to make ends meet in an already difficult economic environment.”

 

The Consumer Price Index (CPI) is the most widely used measure of inflation in the United States.

The CPI measures the average change in prices paid by consumers for a basket of goods and services.

The shelter, or cost of housing, component of inflation used in the CPI doesn’t include information on homebuyers who have borrowed using adjustable-rate mortgages (ARM.)

That means anyone who took out an ARM will more than likely have seen a jump in their monthly cost of living.

In other words, inflation is higher for this group.

 

There are two main reasons why this is so important to understand.

First, it helps explain why some people feel like they are not seeing wage gains even though overall prices are rising.

And second, it has implications for monetary policy since the Fed uses CPI as one input when making decisions about interest rates.

 

The first reason this is important to understand

has to do with how people experience inflation differently based on their circumstances.

If you own your home outright or have a fixed-rate mortgage,

then your monthly shelter costs aren’t going up very much right now because actual rents and

home prices aren’t increasing very rapidly nationwide relative to historical norms.

 

But if you took out an ARM back when housing was booming and

interest rates were low,  your monthly payments could be rising quite quickly right now as adjustable rates reset higher based on prevailing market conditions”

Some people mistakenly believe that the CPI is inflation.

It isn’t. It is a measure of inflation, and like all metrics it is flawed.

There is no way it can accurately reflect the situation for every

Americans including a substantial group of people who borrow using ARMs.

 

 

 

 

 

The CPI: Incomplete

 

The CPI does not include important factors such as housing costs or healthcare costs,

which have been rising faster than general inflation for many years.

In addition, the CPI does not take into account changes in the quality or quantity of goods

and services purchased.

For example, if the price of steak rises but you purchase chicken instead because it’s cheaper,

the CPI would show no change in your cost of living even though you are clearly spending less on food overall.

 

The most important thing to remember about any metric is that it can only give you a snapshot in time

and cannot possibly reflect all aspects of reality.

The best we can do is use multiple measures to get a more complete picture An adjustable-rate mortgage,

or ARM, is a type of home loan where the interest rate is not fixed for the entire life of the loan.

The initial interest rate is often lower than that of a traditional 30-year fixed mortgage,

making it an attractive option for borrowers looking to save money in the short term.

However, after a set period (usually 3-5 years), the interest rate on an ARM can increase significantly,

which could make monthly payments unaffordable for some borrowers.

It’s important to understand

how ARMs work before signing up for one,

the Federal Reserve recently raised interest rates for the fourth time in 2018.

This has caused some concern among traders and

investors about inflationary pressures in the economy.

There are a few key points to consider when thinking about this issue.

 

 

 

The Pros and Cons of Inflation

 

First, it is important to remember that not all inflation is bad.

A certain level of inflation is necessary for healthy economic growth.

It encourages spending and investment, which drives economic activity.

Too much inflation can be damaging, but a little bit of inflation is actually good for the economy.

Second, it is worth noting that the Fed’s main goal is not to control inflation;
rather, its primary mandate is to promote maximum employment and stable prices.

In other words, the Fed cares more about keeping unemployment low than it does about keeping prices from rising too quickly.

So, while higher interest rates may lead to higher prices in some areas of the economy (such as housing),

overall, they are still likely to help boost economic activity by making borrowing cheaper
and encouraging spending and investment may not be suitable for everyone.

 

 

 

US job openings drop significantly

 

US job openings drop significantly

 

US job openings drop significantly, and the number of job openings in the United States fell sharply in February, pointing to a cooling labor market that could boost risk appetite among investors.

The Labor Department said on Tuesday that job openings, a measure of labor demand, declined by 10% from the 11.17 million reported in July and more than a million less than expected.

Economists had expected job openings to fall since reaching a record high of 7.63 million in July 2019 as businesses cut back on hiring amid a slowing economy.
The decline in job postings suggests that companies are starting to feel less confident about their business outlooks and may be more hesitant to add workers.

 

Topics

US job openings drop significantly
Fed stands firm
The US dollar drops

 

 

 

 

 

 

Fed stands firm

 

As the Fed maintains its stance, stocks stage a tremendous surge but may have hit a wall.
As a result of the Fed’s pledge to keep rates low for the foreseeable future, stocks had a significant surge today on the stock market. In the first hour of trade, the Dow Jones Industrial Average increased by more than 400 points or 1.6%. The Nasdaq Composite and the S&P 500 both increased by roughly 2%.

However, the Fed’s policy statement may have caused the rally to falter. The central bank indicated that it would “keep a careful watch” on inflation and employment, indicating that it was not in a rush to hike rates.

The central bank indicated that it would “keep a careful watch” on inflation and employment, indicating that it was not in a rush to hike rates.

The Dow fell more than 100 points from its day’s highs as a result of the remark. The Nasdaq and S&P 500 both declined.

Investors were closely monitoring the most recent developments in the U.S.-China trade dispute. The two nations will pick up their trade negotiations again the following week, and there are rumors that the United States is considering a partial agreement that would suspend some duties.

 

 

The US dollar drops

The US dollar retraced some of its losses on Thursday but the kiwi bucked the trend after the Reserve Bank of New Zealand hiked interest rates. The RBNZ raised rates by 25 basis points to 1.75% as expected, but signaled that it was in no hurry to raise rates further. This weighed on the kiwi, which fell against most major currencies except for the Australian dollar and Japanese yen.

Against the greenback, NZD/USD fell to a low of 0.7273 before recovering somewhat to trade at 0.7300 in early European trading hours. The pair is likely to find support at 0.7250 and resistance at 0.,7350 Traders will be closely watching Friday’s release of US non-farm payroll data for clues about future Fed rate hikes. A strong jobs report could give the dollar a boost while a weak report could see the kiwi resume its rally.

 

 

A forthcoming Fed meeting and oil posted weekly gains

A forthcoming Fed meeting and oil posted weekly gains

A forthcoming Fed meeting and oil posted weekly gains:

Investors are looking forward to the Federal Reserve meeting,
where the monetary policy of the United States will be determined in the coming period. 

Evest follows all developments in the trading market and relays them in the following report:

 

Topics:

 

Fed meeting had a key role

Investors are beginning to prepare for the Fed meeting, which will take place this week.

The US central bank leadership is expected to announce the beginning of the gradual tapering of the Asset Purchase Program.

The two-day meeting of the American Regulatory Authority will be held from 21 to 22 September,
with results to be announced on Wednesday evening.

Statistics released earlier this week showed a slight slowdown in inflation, with an unexpected increase in retail sales.

Consumer confidence in the United States rose in September to 71 points from 70.3 points the previous month,
according to preliminary data calculating this indicator released by the University of Michigan on Friday.

Analysts expected the index to rise to 72 points on average, according to Trading Economics.

According to experts, the current week will be generally quiet until the middle of macroeconomic events,
after which the Fed will determine the mode of trading in hazardous assets.

It will stick to a cautious tone in terms of raising interest rates.

Previously, this situation was seen as moderately optimistic in stock markets,
but now that the stock exchanges are in a correction phase,
any tightening in the Fed’s tone may boost the trend towards profit-making.

Investors will focus on the Fed meeting next week.

The main issue is the announcement of quantitative easing options.

On the eve of the meeting, high volatility in the stock markets is not expected.

According to experts, strong aggregate data on the economy lead to expectations of a reduction in monetary stimulus from the Fed,
but the key point is the timing of its release.

 

Investors are worried

Global markets continue to repurchase failures, taking advantage of the ever-large liquidity provided by major central banks as part of the monetary stimulus to the economy.

However, the threat of tapering in these measures hampers the development of sustainable growth of hazardous assets.

The pandemic problem is creating more uncertainty.

New strains of the coronavirus have hampered its resolution through mass vaccinations.

Investors are increasingly concerned about the problems of China’s construction giant Evergrande,
which has the largest corporate debt in the world.

The risk of bankruptcy remains high, given its ability to hit the Chinese and the global financial system as well.

State authorities make it clear that they are not likely to save the developer and leave it alone with creditors.

The speed of the US economy’s recovery continues to depend on the course of the epidemic and the rate of vaccination.

Adding to the uncertainty is the statement by the Chairman of Moderna that three-stage vaccines may not be sufficient for Americans to protect against Covid-19.

 

Oil rises over 2.5% last week

Oil prices fell on Friday amid a gradual recovery in the US company’s production of oil and petroleum products in the region hit by Hurricane Ida.

Since the beginning of this week, the price of Brent crude has risen by 2.6% and West Texas Intermediate by 2.5%.

The cost of Brent crude futures for November on the London Stock Exchange ICE Futures on Friday is $74.74 per barrel,
$1.23 lower than the closing price of the previous session.

The price of West Texas Intermediate crude futures for October in electronic trading on the New York Mercantile Exchange (NMX) fell to $71.53 per barrel,
1.49٪ lower than the final value of the previous session.

According to the US Bureau of Safety and Environmental Control, in the Gulf of Mexico, after Hurricane Ida passed by the end of August,
the capacity to provide about 28% of oil production has not yet been restored.

 

English Research Corporation: Global oil demand will peak in a short time

Global demand for crude oil will peak sooner than previously thought,
as the Covid-19 pandemic and clean energy trends accelerate the transition from fossil fuels, according to IHS Markit.

The London-based research company’s latest long-term forecast cuts four years and 5.2 million barrels per day from its 2020 peak demand estimate. 

IHS Markit now expects global demand for crude oil to rise until 2033, peaking at 81 million barrels per day,
before beginning a long-term decline.

In the meantime, At the same time, the company’s new global demand scenario for refined products such as gasoline, diesel,
and jet fuel requires a peak in 2036, and demand in 2050 below 2019 levels.

“The energy transition accelerated during COFID- 19, and the combination of changing consumer habits
and a growing sense of urgency around climate change will lead to greater political commitment and financial support to decarbonize the industry.”
Sandeep Sial, IHS Markit Vice President and Head of Oil Markets and Refining said in a press release. 

The forecast coincides with OPEC warning that a delta version of the coronavirus will affect oil recovery until next year. 

OPEC expects oil demand to average 99.7 million barrels per day in the fourth quarter of 2021,
down 110,000 barrels per day from last month’s forecast.

These figures refer to total petroleum liquids, including crude oil and other refining inputs.

 

A positive weekend in Asia and negative in Europe

On Friday, the positive dynamics of the indices prevailed in Asia, where Japan’s Nikkei 225 index rose 0.6%,
China’s Shanghai composite -0.2% and Hong Kong’s Hang Seng added 1%,
but Europe declined in the evening, with France’s KAC, German Dax, and British Footsy down 0.8-1.2%.

The consumer confidence index at the University of Michigan rose to 71 points in September,
while it was expected to grow to 72 points from 70.3 points in August.

A forthcoming Fed meeting and oil posted weekly gains