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RSM Chief Economist Joseph Brusueras: Warsh delivered the right hawkish signals at the press conference and attempted to reinforce the Fed’s credibility in restoring price stability, while also enhancing his own credibility.U.S. stocks continued to decline after the Walsh press conference, with the S&P 500 falling 1%, its biggest drop since July 29, the Dow Jones Industrial Average down 1.65%, and the Nasdaq Composite down 0.6%.On September 17th, Federal Reserve Chairman Warsh declined to answer questions at a press conference regarding his interactions with US President Trump. Trump has been calling for lower interest rates in recent months. Warsh stated, "I have no comment on my discussions with the president." White House Council of Economic Advisers Chairman Christopher Phelan said on Tuesday that raising interest rates would be a "mistake."On September 17th, Federal Reserve Chairman Warsh stated that he would not disclose details of future interest rate decisions by the Federal Open Market Committee (FOMC). He said, "I am not responsible for providing forward guidance. Our decision today (to raise interest rates) is a carefully considered, serious, and responsible one. We have been preparing for and thinking about this decision for the past 110 or 120 days." Warsh also stated that this decision was not market-driven. He said, "Our decision today is based on our assessment of the current situation, our judgment of the employment trend, and our assessment of the strength of the economy. Sometimes, the market tries to anticipate our decisions. I watch market prices to see what information the market is sending. But todays decision is our own."On September 17th, Warsh stated that while the Federal Reserve cannot prevent price shocks in commodities such as oil on its own, the central bank can use policy tools to prevent further spread of inflationary pressures. Warsh said, "We cannot influence the price of any single commodity, such as oil or groceries." However, he pointed out, "We can and will ensure that any changes in relative prices do not spread further, and do not have second- or third-order effects on the economy. Thats our responsibility, and thats what were doing." Warsh made these remarks as U.S. diesel prices hit a record high due to the Iran war.

Oil prices increase despite uncertainties on the amount of a U.S. interest rate hike

Haiden Holmes

Jul 15, 2022 10:37

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Concerns over the Federal Reserve's aggressiveness in raising interest rates to combat excessive inflation led to a spike in oil prices in early Asian trading on Friday.


At 00:07 GMT, Brent crude futures for September delivery jumped 80 cents, or 0.8%, to $99.90 per barrel, while WTI crude futures rose 69 cents, or 0.7%, to $96.47 per barrel.


The most hawkish Fed officials suggested on Thursday that they prefer another 75-basis-point interest rate rise at the U.S. central bank's policy meeting this month, as opposed to the greater rate hike that traders had priced in following Wednesday's inflation report.


The Fed rate rise is expected to follow the 100-basis-point increase by the Bank of Canada on Wednesday, which shocked the market.


A day before Russia attacked Ukraine in what Moscow termed a "special military operation," both benchmark futures fell below the closing price of February 23 on Thursday, as a result of rate hike uncertainty and terrible economic figures. By the conclusion of the trading day, Brent and WTI had recovered nearly all of their losses.


Joe Biden will go to Saudi Arabia on Friday to attend a summit of Gulf allies and encourage them to raise oil output.


The bulk of Organization of the Petroleum Exporting Countries producers are producing at maximum capacity, and it is uncertain how much extra oil Saudi Arabia can send to the market quickly.


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