Tag: US Fed Chair Jerome Powell

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Global Market – Gold, ECB Meeting & U.S. Fed – Powell ‘s testimony

Global Market – Gold, ECB meeting & U.S. Fed – Powell ‘s testimony

This week we will focus on ECB meeting outcome, ECB kept interest rate unchanged and commentary is important to watch out for.  U.S. Fed chair Jerome Powell testimony this week provided further cues on interest rate trajectory and we would be focus on gold which is currently trading at above $2150.

ECB Meeting outcome on 7-Mar-24

ECB kept rates unchanged at 4.50% for fourth straight time as ECB expect softer inflation and stable economic growth, ECB guides for rate cut in June 2024 meeting. 

“We clearly need more evidence, more detail,” she told reporters Thursday in Frankfurt. “We know that this data will come in the next few months. We will know a little more in April, but we will know a lot more in June.”

Christine Lagarde Signals ECB Cut in June with 2% Inflation in Sight

European Central Bank President Christine Lagarde indicated policymakers may be in a position to lower interest rates in June as fresh projections showed inflation hitting the 2% target in 2025.

U.S. Fed Chair Jerome Powell’s Senate Testimony

Powell reiterated that it’s likely the Fed will cut interest rates this year. “We’re waiting to become more confident that inflation is moving sustainably at 2%,” he said. “When we do get that confidence — and we’re not far from it — it’ll be appropriate to begin to dial back the level of restriction.” He also said the Fed is well aware of the risk of cutting too late.

Gold Climbs to Record on Mix of Fed Pivot and Geopolitical Risks

Gold touched an all-time high as fund buying combined with speculation over a Federal Reserve pivot and geopolitical and financial risks underpinned a rally in the precious metal.

Equichain Wealth Advisors: Market View & Opinion

Last week, we have turned neutral to cautious with balance view last week, this week’s comment by U.S. Fed chair Jerome Powell in a testimony to U.S. Congress and ECB ‘s guidance on expectation of first rate cut in June has provided positive trigger to risk-on sentiment.

We will use any correction to add / deploy fund and recent trend looks positive.  Market not expecting any change in rate in this month, but guidance on rate cut in coming months or likely by May 2024 meeting could provide much needed trigger and rally.

Click on the attachment to read the full report:
Global Market – Gold, ECB Meeting & U.S. Fed – Powell ‘s Testimony.pdf
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Global Market – U.S. Fed focus to shift to inflation on strong jobs data

Global Market – US Fed – focus shift to inflation on strong jobs data

This week we will discuss another part of the world where high inflation is problem will be back in focus as US Fed meeting on 26-Jul-23.  Last week, we have discussed that China’s PBOC is reducing policy rates and support growth and providing stimulus package.  

US Fed to hike to highest level seen in year 2000

US Fed current policy rates is 5.00% – 5.25%.  If US Fed increase policy rates by 25-bps on 26-Jul-23 to 5.25% – 5.50% – it will be highest policy rates in 21st Century near to rates seen in the year 2000.  Back in 2006 – 2007 policy rates in U.S. were at 5.25% before market has seen sub-prime crisis followed by recession.

US FOMC meeting minutes for June 2023 policy

Almost all members agreed for more rate hike needed and guided for at least 1 – 2 more rate hike in 2023.  Powell said at a conference in Madrid hosted by the Bank of Spain last week. “Inflation pressures continue to run high, and the process of getting inflation back down to 2% has a long way to go.”  

Equichain Wealth Advisors: Market View & Opinion

We believe, it is time keep balance approach as globally risk-on sentiment is high despite fear of further rate hike by U.S. Fed.  We do believe that such high interest rate in U.S. could have global impact and market has not fully factored in steepest rate hike by US Fed in last 15 – 16 months.

Click on the attachment to read the full report:
Global Market – U.S. Fed focus to shift to inflation on strong jobs data.pdf
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Global Market – BOE hike rate by 50-bps & Powell’s testimony

Global Market – BOE hike rate by 50-bps & US Fed Chair Jerome Powell testimony

This week we will discuss, BOE surprises street by raising interest rate by 50-bps to 5.00% and US Fed chair Jerome Powell in a testimony over 2-days to US Congress indicated further rate hike by 1 or 2 before end of 2023.

BOE raises rates by 50-bps to 5.00% – highest level since 2008.

The nine-member Monetary Policy Committee voted 7-2 for an increase to 5%, the highest level in 15 years and the biggest move since February.

Markets had priced in only a 40% chance of a half-point hike, with most economists anticipating a quarter point.

US Fed chair Jerome Powell – may need one or two more rate hike in 2023

Policymakers feel “it will be appropriate to raise rates again this year, and perhaps twice,” if the economy performs about as expected, even as they’ve been hiked to an appropriately restrictive level, Powell told the Senate Banking Committee Thursday.

Fed officials held rates steady last week after 10 straight increases, giving themselves more time to evaluate how the economy is responding to recent banking stress and higher borrowing costs.  The move left the Fed’s benchmark rate steady in a range of 5% to 5.25%.

Equichain Wealth Advisors: Market View & Opinion

Barring BOE decision which hike rate by 50-bps, decision by all other major banks were in-line with market estimate.  Last week US Fed “PAUSE” on rake hike, ECB raise rates by 25-bps & BOJ maintain its negative interest rate policy and guidance on JGB remains at -0.50% to 0.50%.

We believe further rate hike could impact global economy, which could be pushed in recession for short period of time and globally central banks are prepared to take pain in near term for long term objective to keep inflation at 2%.

Click on the attachment to read the full report:
Global Market – BOE hike rate by 50-bps & Powell’s testimony.pdf
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