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Reserve Bank of Australia Governor Bullock: There is a general consensus that the neutral interest rate has risen.On September 18th, Nick Timiraos, a senior Federal Reserve monetary policy reporter for the Wall Street Journal, wrote that while Trump has consistently criticized the Fed for keeping interest rates too high, he claimed that he had endorsed the decision during a phone call with Fed Chairman Warsh a few days before the decision was made, following the Feds rate hike this week. According to sources, Trumps call with Warsh was unexpected for many of the presidents close advisors. This "truce" clearly indicates that Warsh has temporarily reversed the previous tensions where the White House viewed the Fed as an adversary. The risk is that this situation may only last until the Fed raises rates again. A senior government official stated that if the Fed decides to raise rates again in October (before the midterm elections), Warsh may find himself under even closer scrutiny from Trump and his advisors. Trumps description of a hostile Federal Reserve committee may leave investors wondering whether Warsh is leading the Fed or being manipulated by it.Futures News, September 18th: Overnight oil prices continued their decline. Domestic fuel oil producers lacked confidence in future trading, with market transactions driven by immediate needs. Downstream risk aversion intensified, and refinery shipments were sluggish. It is expected that fuel oil trading will remain stable in some areas today, while others will still see a narrow decline.Reserve Bank of Australia Governor Bullock: In the overall situation, the decline in house prices is not too significant.Reserve Bank of Australia Governor Bullock: We are considering whether we have a sufficiently tight policy.

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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