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Warner Bros. Discovery (WBD.O) plans to reject Paramounts acquisition offer next week. December 31st - According to the minutes released Tuesday, some Federal Reserve officials expressed reluctance to support further policy easing in the near term when the Fed decided to cut interest rates at its meeting this month, suggesting that further rate cuts may face resistance at its next meeting in January. The minutes showed that the decision to cut rates became increasingly difficult as inflation persisted longer than the Fed had anticipated. Since the December meeting, more economic data has been released, showing that strong consumer spending has helped drive robust economic growth, despite a slight increase in the unemployment rate. New data scheduled for release next month may reshape the thinking of Fed officials ahead of their rate meeting in late January.On December 31st, Fxstreet analyst Joshua Gibson pointed out that the Federal Reserve released the minutes of its final interest rate decision of the year, confirming that FOMC members were willing to consider further rate cuts. However, the minutes did not reveal much other significant information. The Feds stance is tilting towards a dovish position, with most policymakers willing to explore the possibility of further rate cuts. However, the Feds policy adjustments still depend on weak inflation data, rather than a lack of inflation data.On December 31st, the Federal Reserve meeting minutes, in its staff economic outlook, noted that overall, real GDP growth is expected to accelerate slightly through 2028 compared to the projections prepared for the October meeting. This primarily reflects the anticipated greater support from financial market conditions and stronger expectations for potential output growth. After 2025, as the negative impact of high tariffs diminishes and fiscal policy and financial market conditions continue to support spending, GDP growth is expected to remain above potential growth through 2028. Consequently, the unemployment rate is expected to gradually decline after this year, reaching a level slightly below the staffs estimated natural rate of unemployment in 2027. Overall, staffs inflation projections for 2025 and 2026 are slightly lower than those presented at the October meeting, but their projections for 2027 and 2028 remain similar to previous projections.On December 31st, the Federal Reserve meeting minutes revealed that participants generally expected economic growth to accelerate in 2026, and that economic activity to expand at roughly the same pace as potential output over the medium term. Many participants anticipated that adjustments to fiscal and regulatory policies, or more favorable financial market conditions, would support economic growth. However, participants believed that uncertainty regarding their forecasts for real GDP growth remained high. Furthermore, some participants noted that structural factors such as technological progress and productivity gains (potentially reflecting increased applications of artificial intelligence) could promote economic growth without creating price pressures, but could also dampen job growth.

The NZD/USD exchange rate is under pressure as investors anticipate crucial US developments

Alina Haynes

Dec 12, 2022 15:37

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Beginning with a high of 0.6411 and a low of 0.6382, the NZD/USD exchange rate is down 0.25 percent, sliding from its previous high of 0.6411 to its previous low of 0.6382. To date, though, it has been the best-performing G10 currency month.

 

ANZ Bank analysts commented, "NZD seasonality is normally positive in December, but while it has that plus rising interest rates on its side, there are no guarantees that it will emerge undamaged from this week's several central bank meetings."

 

The Federal Open Market Committee is due to meet this week, and market participants anticipate a hawkish result. The US producer price index for November was somewhat higher than anticipated, bolstering the case for the Federal Reserve to raise interest rates in the future, albeit at a slower rate.

 

TD Securities analysts estimate that the FOMC will raise rates by 50 basis points at its meeting in December, putting the target range for the Fed funds rate to 4.25 percent to 4.50 percent. "By doing so, the Committee's inflation-adjusted monetary policy stance would move into the restrictive zone. In September, we think that the FOMC will indicate that they will have to shift to a higher-than-expected terminal rate.

 

ANZ Bank analysts stated, "Our key concern is what this may do to the USD, which has been under pressure as the "pivot" narrative has gained traction amid signs of ongoing US inflation."

 

"NZ variables will also play a role, with the HYEFU and GDP due this week," but they are likely to be overwhelmed (again!) by volatility and the global climate.

 

In other news, the US consumer inflation report on Tuesday will set the tone for markets prior to the Federal Reserve meeting. Economists forecast a fall in core inflation to 6.1% in November from 6.3% in October.

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