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On August 22, Commonwealth Bank of Australia economist Kapuso said that Federal Reserve Chairman Powells speech at the annual Jackson Hole Symposium will be the next catalyst for the US dollars movement. However, dont expect Powell to send a clear signal in either direction. Kapuso said he may reserve his options and wait for more data. But if Powell indicates a willingness to cut interest rates, the market is expected to more fully price in a September rate cut, and the US dollar will decline modestly. He said the probability of a September rate cut is currently around 70%, setting a high bar for Powell to deviate from market expectations.Japans 20-year government bond yield rose 2 basis points to 2.660%, the highest level since November 1999.Nvidia (NVDA.O)s U.S. stock price fell by 0.75% in the evening trading.Nvidia (NVDA.O) requested a halt to H20 chip production.On August 22, it was reported that it is important to distinguish between the performance of the US stock market and the overall economy. Pinhao stated in a report that the two are not the same. The firm added that the S&P 500 index has risen nearly 10% so far this year, a significant gain, but the process has been bumpy, with a pullback of approximately 20% in April. However, this performance obscures certain facts, such as the fact that real consumer spending will grow at an annualized rate of 1% in the first half of 2025, while real GDP growth has been slowing. Pinhao added that given these indicators, a Bloomberg survey of economists showed that the average probability of a US recession in the next year is 35%, which is not surprising.

GBP/JPY falls below 161.50 as the rally pauses in the face of inflation concerns and remarks from BoE Governor Bailey

Alina Haynes

Mar 28, 2023 15:34

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GBP/JPY halted and attained a weekly high of 161.80 after a rapid ascent. Due to Monday's optimistic risk sentiment and rising global bond yields, the currency pair rose.

 

In a recent speech, Governor Bailey of the Bank of England (BoE) emphasized the need to remain vigilant for signs of persistent inflationary pressures. If these pressures manifest, he suggested, additional monetary tightening may be necessary. Although there are indications of economic resiliency, Bailey warned that the inflation trajectory may not be completely smooth. An important objective of monetary policy is to prevent persistent inflation resulting from external factors. Additionally, Bailey identified significant strains in portions of the global banking system, which could have implications for the global economy as a whole.

 

Bailey stated that the full impact of recent bank rate hikes has not yet been felt, and that inactivity due to early retirement may have contributed to an increase in cyclical rates. Due to these factors, the Bank of England has significantly raised interest rates. Bailey cautioned that inflation could be more persistent than anticipated, so it is crucial to remain vigilant for signs of inflationary pressure. If such pressures manifest, it may be necessary to tighten monetary policy further to contain inflation.

 

Overall, Bailey's speech emphasizes the Bank of England's commitment to economic growth and price stability. The Bank of England is assiduously managing risks to maintain inflation within its target range.

 

Due to the absence of a press conference at the March meeting of the Board of Governors, these remarks are notable. The majority of analysts predict that the BoE will suspend in May, while others anticipate that additional tightening will be necessary as inflation control remains the central bank's top priority over banking uncertainty.

 

The British Retail Consortium (BRC) reported that store price inflation rose to 8.9% in March, up from 8.2% in February, highlighting the inflationary pressure. Alternatively, Japan's Minister of Economy Goto announced plans to invest JPY 2,200,000,000,000 in a stimulus program.


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