Rate hikes when

Share to Twitter Share to Linkedin Topline The Bank of England on Thursday predicted that the U.K. will fall into a recession in the final quarter of this year as it announced its steepest rate hike in nearly three decades, following similar moves by the central banks of the Eurozone and the U.S. as all of them attempt to clampdown on runaway inflation. Key Facts The Bank of England raised interest rates by 50 basis points—its sharpest hike in 27 years—to 1.75%. The central bank also warned that inflation in the U.K. could rise to 13% by the end of the year—up from 9.4% in June, worsening the country's already severe cost of living crisis. The steep inflation means the real household income of Britons will “fall sharply” for the remainder of 2022 and 2023, the central bank noted. The Bank of England blamed inflation on the “near doubling” of natural gas prices since May due to Russia’s throttling of supplies to Europe and the … [Read more...] about U.K. Central Bank Forecasts Recession This Year—Joining U.S. And Eurozone With Historic Rate Hike

Share to Twitter Share to Linkedin Topline The stock market was mixed Friday after the U.S. economy added back a better-than-expected 528,000 jobs in July, with investors now anticipating that a strong labor market will keep the Federal Reserve on its path of aggressive interest rate hikes to bring down inflation. Key Facts The Dow Jones Industrial Average rose 0.2%, nearly 100 points, while the S&P 500 fell 0.2% and the tech-heavy Nasdaq Composite dropped 0.5%. The S&P 500 fell despite a strong non-farm payrolls report : The labor market added back 528,000 jobs in July—easily surpassing the 258,000 expected by analysts, according to the Bureau of Labor Statistics on Friday. Unemployment ticked down to 3.5%, while wage growth continued to rise, up 0.5 percentage points from the previous month and over 5 points higher than a year ago, signaling that inflation pressures continue to remain. With the labor market still running … [Read more...] about Stocks Under Pressure Despite Strong Jobs Report As Investors Fear Bigger Fed Rate Hikes

- A + A LONDON (Aug 4): The Bank of England is expected to raise interest rates by the most since 1995 on Thursday, even as the risks of a recession mount, in an attempt to stop a surge in inflation from becoming embedded in Britain's economy. Most investors and economists predict the BoE will increase its benchmark rate by half a percentage point to 1.75%, its highest level since late 2008 at the start of the global financial crisis, when it announces its decision at 1100 GMT. Britain's main inflation rate has soared to 9.4% - and could hit 15% in early 2023 according to the Resolution Foundation think-tank - as the repercussions of Russia's invasion of Ukraine combine with post-pandemic strains on the world economy. The BoE, which has already raised borrowing costs five times since December, said in June it would act forcefully if inflation pressures became more persistent. Since then, inflation expectations among the public have eased off a bit and the pricing … [Read more...] about Bank of England on brink of biggest rate hike since 1995

- A + A HONG KONG (Aug 4): The dollar was on the front foot on Thursday, helped by several U.S. Federal Reserve officials pushing back against suggestions they will slow the pace of interest rate hikes, while the pound was flat ahead of a Bank of England meeting. The dollar index, which measures the greenback against six peers, was steady in early trade at 106.39 having eked out small gains overnight. It is up around 0.5% this week, reversing the trend of the previous two weeks. "The dollar weakened last week after the (policy setting) Federal Open Market Committee meeting because the market wanted to believe that the Fed was pivoting in a dovish manner because of slowing growth," said Sim Moh Siong, currency strategist at Bank of Singapore. "This week, there are a lot more FOMC speakers pushing back against this idea, all singing the same tune: ‘we are not done, and you should expect more rate hikes’," he added . San Francisco Fed President Mary Daly and … [Read more...] about Dollar climbs as Fed officials suggest more rate hikes to come

- A + A (Aug 4): Gold was steady as investors weighed comments from the Federal Reserve which signaled it will implement further interest-rate increases to contain price pressures. Bullion is hovering near a four-week high after rising 0.3% on Wednesday, as market jitters over the fallout from US House Speaker Nancy Pelosi’s visit to Taiwan boosted some haven demand. That has eased after her trip ended. Fed officials pledged the central bank would continue an aggressive fight to cool an inflation rate that’s at a four-decade high, even if higher rates cause the risk of an economic downturn. Fed Bank St. Louis President James Bullard said he favors a strategy of “front-loading” big interest-rate hikes, and he wants to end the year at 3.75% to 4%, while his Richmond and Minneapolis counterparts -- Thomas Barkin and Neel Kashkari -- said the central bank was committed to lowering inflation and a recession could happen. “The primary driver for gold will be Wall … [Read more...] about Gold steady as traders weigh Fed rate hike, inflation outlook

Shaktikanta Das (FIle image) Predicting the outcome of the Reserve Bank of India’s three-day monetary policy committee (MPC) meeting, which begins on August 3, is a no-brainer this time. Governor Shaktikanta Das has already talked about rate hikes to combat inflation. This time, the bet is a 25-35 basis points (bps) hike. One bps is one-hundredth of a percentage point. It makes sense, considering that the rate-setting panel’s biggest foe now is high inflation. Some easing in the recent prints doesn’t take away the fact that inflation remains far above the MPC’s comfort zone. A 35 bps hike will take the repo rate, the rate at which the RBI lends short-term funds to banks, back to 5.25 percent to pre-pandemic levels and that is where the rates are likely to settle in the current cycle unless inflation further surprises on the upside. The MPC has already hiked the rates by 90 basis points in the current rate cycle, in line with the plan to gradually withdraw from the … [Read more...] about Banking Central | Another rate hike coming this week

- A + A BENGALURU (Aug 5): The Indian rupee firmed on Friday after the Reserve Bank of India (RBI) announced its third rate hike in as many months, while the Thai baht strengthened more than 1% on potential start of policy tightening next week. The RBI raised its repo rate by 50 basis points (bps) as June retail inflation hit 7%. Economists expect more hikes ahead as inflation is seen holding at the central bank's top end of the 2%-6% tolerance band for the rest of the year. Given the risks that sustained high inflation could destabilise inflation expectations and that inflation will remain above target band for a few more months, the RBI will continue to hike rates over the next few months, Mitul Kotecha, head of emerging markets strategy at TD Securities said. "Like other Asian currencies, the rupee has benefited from a recent drop in the US dollar. Having pulled back from a breach of 80, we continue to expect some consolidation in the near term." The Indian … [Read more...] about Indian rupee jumps after RBI’s rate hike, Thai baht firms 1%

- A + A NEW YORK/BENGALURU (Aug 5): Wall Street's main indexes fell on Friday, with technology stocks bearing the brunt of a selloff, after a solid jobs report bolstered the case for the Federal Reserve to press ahead with interest rate hikes. US employers hired far more workers than expected in July, the 19th straight month of payrolls expansion, with the unemployment rate falling to a pre-pandemic low of 3.5%. The report provided the strongest evidence yet that the economy was not in recession. "It is a blockbuster number, clears the path for the Fed to continue with the hawkish viewpoints that have been expressed recently. I think a 75 basis points hike in September is most likely," said Dean Smith, chief strategist at FolioBeyond. "There was such a strong urge for people to call the all-clear on inflation, and we are just not there. Inflation is becoming more embedded and it is actually accelerating, not decelerating." Growth index, which houses technology … [Read more...] about Wall Street falls as solid jobs data fuels rate hike worries

- A + A BENGALURU/OAKLAND, California (Aug 5): The S&P 500 ended lower on Friday (Aug 5), weighed down by Tesla and other technology-related stocks, after a solid jobs report torpedoed recent optimism that the US Federal Reserve (Fed) might let up its aggressive campaign to reign in decades-high inflation. Data showed US employers hired far more workers than expected in July, the 19th straight month of payrolls expansion, with the unemployment rate falling to a pre-pandemic low of 3.5%. The report added to recent data painting an upbeat picture of the world's largest economy after it contracted in the first half of the year. That deflated investors' expectations that the Fed might let up in its series of rate hikes aimed at cooling the economy. "This is all about the Fed. A very strong jobs report like this puts pressure on the Fed to tighten for longer," said Adam Sarhan, the chief executive of 50 Park Investments. "The market is scared the Fed is going to … [Read more...] about S&P 500 ends down as jobs data rekindles Fed rate hike fear

- A + A (Aug 8): Gold held its biggest decline in two weeks after strong US jobs growth tempered recession fears, suggesting the Federal Reserve is likely to persist with steep interest-rate hikes to curb inflation. Bullion dropped 0.9% on Friday as US nonfarm payrolls jumped by more than double what economists had forecast. That spurred gains in the dollar and Treasury yields, reducing the appeal of non-interest-bearing gold. The data support the case for the Fed to raise its benchmark rate by 75 basis points next month, matching the moves it made in June and July. It also means the central bank may need to keep borrowing costs higher for longer, contrary to market expectations for rate cuts in 2023. US inflation figures later this week will provide more clues on the likely path. The precious metal has still rallied for the last three weeks, drawing haven support from fears of a global recession and heightened US-China tensions. Beijing has been conducting … [Read more...] about Gold holds drop after US jobs data support rate-hike outlook