Interest rates in the US increase for the eleventh straight month
The US dollar edged higher last night following the FOMC decision to raise interest rates by 25 basis points to 3.75%. The dollar strengthened on the back of the release, cable was seen below the 1.8000 level again, and $1.2130 against the euro.
Although a minority of economists had expected the Fed to pause its rate hike cycle in the wake of Katrina, the decision to push rates higher had largely been priced into the markets.
The accompanying statement was on the hawkish side. The committee said that monetary policy was still ‘accommodative’ and rates could be raised at a ‘measured pace’. This would indicate that further tightening is likely in the coming months. They also stated that the effects of Katrina would be felt by the US economy in the ‘near term’.
The FOMC warned that rising energy prices could push inflation higher rather than having any major impact on economic growth. The decision to raise rates was not unanimous with one member voting to keep rates stable.
As the aftermath of Katrina continues to be well documented, Hurricane Rita is adding to energy price volatility as it sweeps across the Florida region. US crude rose by more than $1 a barrel amid worries that Rita would hit oil and gas operations in the Gulf of Mexico and refineries along the Texas coast.
Yesterday also saw the release of the German ZEW investor confidence survey. The survey dropped for the first time in four months as concerns about the nation’s election standoff and oil prices dimmed the economic outlook. The gauge of expectations fell to 38.6 from a reading of 50 in August, and came in well below expectations.
In the UK yesterday more light was shed on the current state of the housing market by the Royal Institution of Chartered Surveyors. Indications are that the market is showing signs of stabilising.
All eyes today will be on the release of the Bank of England minutes at 9.30am. August showed a clear 5-4 split in the decision to cut rates in the UK. A more unanimous decision is expected this month given concerns over oil prices and the likely negative impact on future growth and inflation.
Although a minority of economists had expected the Fed to pause its rate hike cycle in the wake of Katrina, the decision to push rates higher had largely been priced into the markets.
The accompanying statement was on the hawkish side. The committee said that monetary policy was still ‘accommodative’ and rates could be raised at a ‘measured pace’. This would indicate that further tightening is likely in the coming months. They also stated that the effects of Katrina would be felt by the US economy in the ‘near term’.
The FOMC warned that rising energy prices could push inflation higher rather than having any major impact on economic growth. The decision to raise rates was not unanimous with one member voting to keep rates stable.
As the aftermath of Katrina continues to be well documented, Hurricane Rita is adding to energy price volatility as it sweeps across the Florida region. US crude rose by more than $1 a barrel amid worries that Rita would hit oil and gas operations in the Gulf of Mexico and refineries along the Texas coast.
Yesterday also saw the release of the German ZEW investor confidence survey. The survey dropped for the first time in four months as concerns about the nation’s election standoff and oil prices dimmed the economic outlook. The gauge of expectations fell to 38.6 from a reading of 50 in August, and came in well below expectations.
In the UK yesterday more light was shed on the current state of the housing market by the Royal Institution of Chartered Surveyors. Indications are that the market is showing signs of stabilising.
All eyes today will be on the release of the Bank of England minutes at 9.30am. August showed a clear 5-4 split in the decision to cut rates in the UK. A more unanimous decision is expected this month given concerns over oil prices and the likely negative impact on future growth and inflation.
posted by Wise Money @ 8:20 AM
0 Comments:
Post a Comment
Links to this post:
Create a Link
<< Home