It was no particular surprise to see the Federal Reserve cut its benchmark interest rate by half a percentage point to a range of 4.75% – 5.0%. Of the 12 voting members, only one demurred and even they voted for a quarter point reduction. Chair Powell noted “this reflects our growing confidence that with an…
September will see interest rate decisions from the U.S. Federal Reserve, Bank of England and the European Central Bank. It is probably fair to say the majority of commentators are expecting rate cuts and, theoretically, the latter always enhances the value of equities. However, rate cuts at this juncture would imply a question mark over…
It has been a very busy few weeks. The UK has a new government, intent on ‘growing the economy’. President Biden announced he was suspending his 2024 re-election campaign in the wake of mounting pressure from within the Democratic Party after a series of gaffes had seriously damaged his credibility. Perhaps the only real surprise…
The U.S. Federal Reserve kept its key interest rate unchanged and guided that just one reduction might be expected before the end of 2024. It added that it believes the long run interest rate (however one defines such a number) is higher than previously thought. Not that long ago, there was realistic chatter of 5…
We have now entered territory where, if rate cuts are realistic, the data will support it. In both the U.K. and U.S., September reductions are increasingly being thought of as probable rather than possible. That said, having missed inflation targets for years via inaccurate forecasting, central banks carry a burden their battered credibility will struggle…
Wishful thinking is a poor replacement for that of the critical variety. Not too long ago, investors were expecting the U.S. Federal Reserve to deliver 5 rate cuts this year. Now, that number is considerably less. But then, it’s hardly surprising when U.S. core annual inflation for March was unchanged at 3.8%, exactly the same…
Markets continue hoping that rate cuts are close while central banks remain happy to oblige them, without actually delivering the goods. Fed chairman, Jay Powell, said it was not far from gaining confidence that inflation is trending to target and that cuts would likely be appropriate later this year. Not for the first time, the…
The U.S. Federal Reserve maintained interest rates at a 23 year high of 5.25% – 5.50%. However, Chairman Jerome Powell didn’t think it likely easing would commence in March, as many assumed previously. The Bank of England’s statement was not dissimilar in tone as it maintained its benchmark rate of 5.25%. It was the same…
Stock markets have reacted badly to inflation figures from the U.K., U.S. and Eurozone. We’ve commented previously about the groupthink that now infests central banks and policy makers, in general. A cozy consensus was emerging that falling inflation would pave the way for rate cuts but inflation, while sharply lower over the past 12 months,…
12 months ago, Federal Reserve Chairman Jay Powell, noted “The question of when to moderate the pace of increases is much less important than the question of how high and how long to keep monetary policy restrictive”. At the time, U.S., UK and Eurozone rates were 4%, 3% and 2.5% respectively. After their December 2023…