Softer US inflation eases rate hike pressure
US consumer price index (CPI) inflation eased more than expected in June, reducing the probability of a hike at the Federal Open Market Committee (FOMC) meeting later this month.
Insights Topic
Monetary Policy
Warsh’s debut eases independence concerns, but weakens the ‘Fed put’
Wednesday’s Federal Reserve (Fed) press conference was one of the most eagerly awaited in a very long time. Kevin Warsh’s debut as chair, after three weeks in post, was not an easy one.
One hike done, but don’t bet on a long cycle
Yesterday, the European Central Bank (ECB) delivered a widely expected 25 basis point (bp) rate hike. becoming the first major central bank in developed markets to have raised rates in response to the Iran conflict.
This isn’t 2022, but inflation threat is real
With no end in sight to the US-Israeli war with Iran, and tensions escalating once again over the weekend, investors are bracing for more volatility. Inflation fears have ramped up significantly, reflected clearly in government bond markets where rising yields show rate cuts being priced out and rate hikes increasingly being priced in.
UK banks earn lower capital requirements with stress test results
After solid stress test results from UK insurers last week, on Tuesday it was the banks’ turn as the Bank of England (BoE) published its 2025 stress test results along with December’s Financial Stability Report.
Job done for Reeves but numbers far from certain
The wait is over. UK Chancellor Rachel Reeves delivered her much anticipated November Budget on Wednesday, ending weeks of rumours and leaks that had created a general feeling that all measures were on the table – now investors, businesses and taxpayers alike can fill in the empty cells on their spreadsheets and calculate what’s left.
Stakes are high but Fed in control as it ends QT
In 2017, when the Federal Reserve (Fed) was preparing to shrink its balance sheet, then-chair Janet Yellen famously described the process of quantitative tightening (QT) as being "like watching paint dry."
Fed tension limits scope for UST rally
Jerome Powell and his Federal Reserve (Fed) colleagues decided to cut the Fed Funds rate by 25bp to 3.75-4% at last week’s policy meeting, marking 150bp of cuts since the cycle began in September 2024.
Cooling inflation offers relief amid US data blackout
Amidst an economic data blackout caused by the US government shutdown, markets received a bit of positive news on Friday with the release of the US CPI report which showed consumer prices in September increased at a slower pace than expected.
Fed rate cut does little for clarity on policy path
The Federal Reserve (Fed) cut interest rates by 25 basis points (bp) on Wednesday, exactly as markets had anticipated, marking its first rate reduction since December 2024.
BoE: A historic vote and a hawkish cut
The Bank of England (BoE) delivered a widely expected 25bp cut on Thursday, taking interest rates to a two-year low of 4%. But the real story was in the balance of views on the Monetary Policy Committee (MPC), which for the first time in its 28-year history had to conduct two rounds of voting and has forced markets to reassess the path of future rate cuts.
ECB preview: Is this the bottom for monetary policy rates?
The European Central Bank (ECB) will be alone this week in delivering its latest monetary policy decision, with the next Federal Reserve, Bank of England and Bank of Japan meetings not until the week commencing June 16.