Tag Archives: US interest rate

US Interest Rate Expectations

US Interest Rate Expectations: Traders’ doubts have increased about the Federal Reserve implementing two rate cuts
after they expected it last week following moderate inflation data in the US for April.

 

Content:

Delayed Interest Rate Cuts

US Interest Rate Expectations

Global Monetary Policy Easing

 

 

 

 

Delayed Interest Rate Cuts

As Goldman Sachs forecasts, the strength of the US dollar might persist longer if the Federal Reserve
keeps interest rates at their current levels while other countries choose to reduce borrowing costs.

Strategists at Goldman Sachs wrote,
“If the Fed keeps the interest rate unchanged, but other regions decide to ease

their local monetary policy instead of waiting for the US central bank,
the divergence in monetary policies is likely to result in the prolonged strength of the dollar.”
These experts expect interest rate cuts in June in Canada, the UK, and the Eurozone.

Since the beginning of this year, the US dollar has risen against all its G10 peers.
The Bloomberg Dollar Spot Index, which tracks the strength of the US currency, has increased by about 3%.

 

US Interest Rate Expectations

Traders’ doubts have increased about the Federal Reserve implementing two
rate cuts after they expected it last week following moderate inflation data in the US for April.

The swap market anticipates US interest rate cuts of about 40 basis points by the end of 2024,
with the first full 25 basis point cut expected at the upcoming monetary policymakers’ meeting in November.

Federal Reserve governor Christopher Waller indicated yesterday

that a consistent decline in US data over the next three to five months would allow the
central bank to consider lowering borrowing costs by the end of 2024.

 

 

 

 

Global Monetary Policy Easing
European Central Bank President Christine Lagarde indicated that
an interest rate cut will not be ruled out next month,
as the rapid increases in the region’s inflation index have been largely curbed.

Analysts wrote, “When the divergence in macroeconomic
factors and potential monetary policies was more pronounced,
policymakers closely monitored shifts in the US Federal Reserve to limit currency volatility.”

They pointed out that if central banks worldwide start easing
“relatively early and more strongly” than the Federal Reserve, it could help the US achieve its inflation target.

 

US Interest Rate Expectations

Bitcoin’s strong rise may delay the US interest rate cut

Bitcoin’s strong rise may delay the US interest rate cut: In light of the strong rise of the most famous digital currency in the markets in terms of market capitalization, Bitcoin, as it exceeded the $69,000 barrier and reached its highest level ever this week.
This record rise in the price of Bitcoin may lead the US Federal Reserve to postpone the decision to cut interest rates planned for later this year.

 

Topics

Bitcoin’s strong rise may delay the US interest rate cut

The possibility of an imminent European interest rate cut

Doubts about the imminent date for the Federal Reserve to change its monetary policies

Bitcoin’s strong rise may delay the US interest rate cut

In light of the strong rise of the most famous digital currency in the markets in terms of market capitalization,
Bitcoin, as it exceeded the $69,000 barrier and reached its highest level ever this week.
This record rise in the price of Bitcoin may lead the US Federal Reserve
to postpone the decision to cut interest rates planned for later this year.
Bitcoin has crossed the $60,000 level and the recent strong rise in stocks may be a sign of a bubble in risky assets,

this could worry the US Federal Reserve and push it to postpone the interest rate cut as previously planned.

There is a possibility that the US Federal Reserve will maintain a tight monetary policy for a longer period,
as an early cut in interest rates could lead to increased inflation in asset prices or cause further rises in the US inflation rate.

 

The possibility of an imminent European interest rate cut

Following yesterday’s decision by the ECB Governing Council not to change interest rates to 4.50%,
ECB monetary policymakers today continued to signal a possible rate cut soon.

European Central Bank member Madis Müller said European interest rates are likely to fall in the
future while stressing that inflation must stabilize at the central bank’s 2% target sustainably before any action is taken.

At the same time, European Central Bank Governing Council member Robert Holzmann
stated that there may be a change in monetary policy in the future,
and ECB member Gediminas Šimkus. stressed that although it is unlikely that monetary policy will be eased in April,
it is highly expected. Interest rates will be cut in June 2024.

However, a member of the Governing Council of the European Central Bank, François Villeroy,
stated today that it is very likely that interest rates will be cut in the spring, from April to next June,
noting that there is a secondary problem related to the exact timing of the start of the cuts despite confirmation of happening this year.

 

Doubts about the imminent date for the Federal Reserve to change its monetary policies

An unexpected rise in core inflation in January dramatically changed market expectations.
Expectations of an interest rate cut in March may shift to doubt about any cuts this year.

Despite this shift in market sentiment, Federal Reserve Chairman Jerome Powell continues
to emphasize the expected slowdown in the core PCE inflation rate on an annual basis.
Expectations are for it to decline to around 2.5% by May, making a June rate cut likely

It raised concerns about the validity of economic forecasts announced in December,
expected cuts of 75 basis points, in light of recent strong inflation and jobs figures.

 

Bitcoin’s strong rise may delay the US interest rate cut