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On September 17th, Robert Sorkin, chief U.S. economist at PGIM, stated that the latest Federal Reserve meeting signaled that the Fed could implement three rate hikes, or even more if necessary, with just a slight push. This rate hike was hawkish, signaling another rate hike this year. Of the 18 Fed officials who submitted forecasts, eight expect three rate hikes in this cycle by the end of 2027. In a report, Sorkin noted that Fed Chairman Warshs mention of the Fed "withdrawing some easing measures" suggested that he and other participants viewed Wednesdays action as merely a small step towards tightening financial conditions, implying further action is possible. Sorkin added that the risk of further Fed rate hikes remains high if inflation continues to be high.On September 17th, Futures News reported that Zhang Guoqing, member of the Political Bureau of the CPC Central Committee and Vice Premier of the State Council, stated in his concluding remarks that it is essential to thoroughly study and implement the spirit of General Secretary Xi Jinpings important instructions and the requirements of Premier Li Qiangs speech, and to earnestly enhance the sense of urgency, responsibility, and mission in developing advanced manufacturing. He emphasized the need to focus on key areas and crucial aspects, deeply implement the high-quality development action plan for key industrial chains, vigorously develop next-generation intelligent manufacturing, accelerate the upgrading and integrated development of the industrial system, and solidly promote the implementation of various tasks. He also stressed the importance of better leveraging the role of market mechanisms, accelerating the construction of a high-quality standard system, continuously rectifying disorderly and irrational competition, actively helping enterprises solve practical difficulties, and striving to create a favorable ecosystem for the development of advanced manufacturing.On September 17, the Pakistani Foreign Ministry issued a statement on the evening of the 16th, saying that Pakistan summoned the Chargé dAffaires ad interim of the Indian High Commission in Pakistan that day to lodge a strong protest against the "highly provocative and unacceptable behavior" taken by an Indian Navy vessel in Pakistans Exclusive Economic Zone on the 15th. The statement said that during the Pakistani Navys biennial routine exercises, the Indian warship took provocative actions at extremely close range towards a Pakistani warship, resulting in a contact between the two vessels. This action seriously violated the relevant agreements signed by both sides and could escalate regional tensions. The statement urged India to strictly abide by international law and bilateral agreements, especially those aimed at preventing maritime conflicts. The Chargé dAffaires ad interim of the Pakistani High Commission in India will lodge the same protest with the Indian Ministry of External Affairs.Japanese Finance Minister Satsuki Katayama: No comment on the Bank of Japans policy.Japanese Finance Minister Satsuki Katayama: The Bank of Japan is expected to work closely with the government to implement appropriate monetary policy in order to achieve the 2% price target.

GBP/USD seeks to regain 1.2300 as higher UK CPI strengthens the case for a rate hike by the Bank of England and the USD retreats

Alina Haynes

Mar 23, 2023 15:00

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During the Asian session, the GBP/USD pair attempts to reclaim the resistance level at 1.2300. Following a vertical correction, the Cable has recovered to near 1.2260 as the market anticipates that the absence of hawkish interest rate guidance from Federal Reserve (Fed) chair Jerome Powell while addressing the economy at the monetary policy meeting indicates that the Fed is close to ending its policy-tightening spell.

 

S&P500 futures have generated some gains in the Asian session following a decline on Wednesday as a result of Fed Powell's confirmation that the fight against intractable U.S. inflation will continue. Chairman of the Federal Reserve Jerome Powell has ruled out rate cuts in 2023, citing the difficulty of controlling inflation. In addition, US Treasury Secretary Janet Yellen's statement that the government "does not plan to insure all uninsured bank deposits" heightened fears of a banking sector collapse.

 

Following a recovery move, the US Dollar Index (DXY) has retreated on expectations that additional credit tightening to protect banking institutions will reduce overall demand, economic activity, and inflation. In the interim, the demand for US government bonds has increased as a result of expectations that US Janet Yellen will end further policy restrictions and reduce support for all bank deposits.

 

On the front of the United Kingdom, the Pound Sterling is likely to maintain its strength as the Bank of England (BoE) is scheduled to raise rates for the eleventh consecutive time. Governor Andrew Bailey of the Bank of England is expected to raise interest rates by 25 basis points (bp) in response to rising food and non-alcoholic beverage prices, as well as rising energy costs, which have contributed to inflation in the United Kingdom.

 

In the midst of global banking turmoil, the Bank of England's (BoE) interest rate decision will be difficult, as policymakers were divided over whether to raise rates further or maintain them at their present level.


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