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The Euro breaks lower once the Fed raises rates
Confirmed
In Short: The US Federal Reserve raised interest rates by a quarter of a percentage point, bringing the target range to 3.75 percent to 4 percent, citing persistent inflation and concerns about government borrowing.
The Bank of England is also under pressure to raise interest rates, with government bond yields reaching their highest levels in decades, potentially impacting the Pound Sterling.
In response, the Euro weakened against other major currencies, with the Pound Sterling rising 0.1% against the Euro and 0.7% against the New Zealand Dollar, while holding near $1.354 against the US Dollar.
What's confirmed
- The Bank of England is also under pressure to raise interest rates, with government bond yields reaching their highest levels in decades, potentially impacting the Pound Sterling.
- In response, the Euro weakened against other major currencies, with the Pound Sterling rising 0.1% against the Euro and 0.7% against the New Zealand Dollar, while holding near $1.354 against the US Dollar.
What's still developing
- The United States Federal Reserve has said it will raise interest rates by a quarter of a percentage point as inflation, driven by soaring fuel prices amid the US-Iran war, continues to weigh on the economy.
- The Fed, which is the central bank of the US, said on Wednesday that it will hike interest rates by 25 basis points to 3.75 percent to 4 percent.
- After Wednesday’s hike, Fed officials expect one more rate increase this year, according to their quarterly projections, and expect rates to remain unchanged through next year.
- “There [has been] a lot of pressure on Chairman Warsh to raise interest rates because of inflation coming in high, and that has been compounded by concerns about Trump’s pressure” as the president has continued to demand that interest rates be lowered, Klein said.
- “Higher interest rates tend to weaken the economy … but if the market believes that there’s going to be a rate increase, it’s priced in already as prices move on news, so this won’t be news,” Klein said, adding that should help steady yields.
- It is the first hike in more than three years and comes just weeks before the US midterm elections, despite repeated demands from US President Donald Trump to lower rates.
- CME FedWatch, which tracks the likelihood of monetary policy decisions, forecast a 92.3 percent chance of the Fed increasing rates to 3.75 to 4 percent.
- Both platforms cover financial and business news as well as sport and… The Bank of England is facing mounting pressure to raise interest rates on Thursday amid a global bond market rout fuelled by concerns over runaway government borrowing and sticky inflation.