BOE holds interest rates unchanged
The Bank of England voted to hold interest rates unchanged at 5% at the September 19 meeting, as expected.
The BOE last cutt interest rates by 25 basis points at its last meeting, in what was the first rate cut since March 2020.
US dollar under pressure after agressive Fed rate cut
- US dollar trades near 14-month low
- Investors continue to sell off the dollar
The US dollar fell in European trade on Thursday against a basket of major rivals, extending losses for the second day and touching 14-month lows after the Federal Reserve cut interest rates aggressively yesterday.
The losses came after the Federal Reserve issued a large 0.5% interest rate cut yesterday, and expected even more cuts this year and the next.
The Index
The dollar index fell 0.5% today to 100.52, with a session-high at 101.47.
The index closed down 0.1% on Wednesday, the fourth loss in five sessions, marking 14-month lows at 100.22.
The Fed
The Federal Reserve announced an interest rate cut of 50 basis points from 5.5% to 5%, while many analysts expected a smaller 0.25% cut.
It’s the first decision of its kind in 2020, and puts an end to the latest cycle of policy tightening, which started in March 2022.
The Fed expected a similar cut by the end of 2024, and also expected a 1% cut in 2025, and a 0.5% cut in 2026.
The Fed’s statement expressed confidence that inflation is sustainably heading towards 2%, and that the risks facing employment and inflation have become balanced.
Outlook
The Fed expects the growth rate to hold at 2% in 2024, 2025, and 2026.
It also expects the unemployment rate at 4.4% in 2024 and 2025, before falling to 4.3% in 2026. It reduced the outlook for inflation to 2.6% in 2024, then to 2.2% in 2025, and 2% in 2026.
Powell
Fed Chair Jerome Powell said on Wednesday, the Fed isn’t in a hurry about rate cuts, adding he doesn’t see recession risks in the US.
The Fed Chair asserted the US economy continues to grow at a strong pace, while unemployment is holding below 4%.
He adds that policy tightening efforts, which the Fed implemented since mid-2022, has borne results.
US Rates
According to the Fedwatch tool, the odds of another 0.5% Fed rate cut in November stood at 35%, while the odds of a 0.25% rate cut stood at 65%.
Gold prepares to surpass record high at $2600 after large Fed rate cut
- US dollar decline underpins gold prices
- Gold could target $2700 for first time ever
Gold prices rose in European trade on Thursday, resuming strong gains and about to surpass the record high scaled yesterday at $2600 as the dollar loses ground.
The wide gains came after the Federal Reserve issued a large 0.5% interest rate cut yesterday, and expected even more cuts this year and the next.
Prices
Gold prices rose 1% today to $2585 an ounce, with a session-low at $2551.
On Wednesday, gold lost 0.45% on profit-taking away from record highs at $2600.
The Index
The dollar index fell 0.4% on Thursday, about to plumb 14-month lows at 100.22 against a basket of major rivals.
A weaker dollar makes greenback-denominated gold futures cheaper to holders of other currencies.
Investors are fleeing the dollar after the Fed launched a new policy easing cycle with aggressive rate cuts to boost the economy.
The Fed
The Federal Reserve announced an interest rate cut of 50 basis points from 5.5% to 5%, while many analysts expected a smaller 0.25% cut.
It’s the first decision of its kind in 2020, and puts an end to the latest cycle of policy tightening, which started in March 2022.
The Fed expected a similar cut by the end of 2024, and also expected a 1% cut in 2025, and a 0.5% cut in 2026.
The Fed’s statement expressed confidence that inflation is sustainably heading towards 2%, and that the risks facing employment and inflation have become balanced.
Outlook
The Fed expects the growth rate to hold at 2% in 2024, 2025, and 2026.
It also expects the unemployment rate at 4.4% in 2024 and 2025, before falling to 4.3% in 2026. It reduced the outlook for inflation to 2.6% in 2024, then to 2.2% in 2025, and 2% in 2026.
Powell
Fed Chair Jerome Powell said on Wednesday, the Fed isn’t in a hurry about rate cuts, adding he doesn’t see recession risks in the US.
The Fed Chair asserted the US economy continues to grow at a strong pace, while unemployment is holding below 4%.
He adds that policy tightening efforts, which the Fed implemented since mid-2022, has borne results.
US Rates
According to the Fedwatch tool, the odds of another 0.5% Fed rate cut in November stood at 35%, while the odds of a 0.25% rate cut stood at 65%.
The SPDR
Gold holdings at the SPDR Gold Trust remained unchanged yesterday at the total of 872.23 tonnes, the highest since January 3.
Ripple loses ground despite improving risk appetite following Fed decision
Most cryptocurrencies lost ground on Wednesday even as the risk appetite rebounded cautiously following the Federal Reserve’s policy decisions.
The Federal Reserve announced an interest rate cut of 50 basis points from 5.5% to 5%, while many analysts expected a smaller 0.25% cut.
It’s the first decision of its kind in 2020, and puts an end to the latest cycle of policy tightening, which started in March 2022.
The Fed expected a similar cut by the end of 2024, and also expected a 1% cut in 2025, and a 0.5% cut in 2026.
The Fed’s statement expressed confidence that inflation is sustainably heading towards 2%, and that the risks facing employment and inflation have become balanced.
The Fed expects the growth rate to hold at 2% in 2024, 2025, and 2026.
It also expects the unemployment rate at 4.4% in 2024 and 2025, before falling to 4.3% in 2026. It reduced the outlook for inflation to 2.6% in 2024, then to 2.2% in 2025, and 2% in 2026.
Ripple
Ripple fell 2.1% as of 20:20 GMT on Coinmarketcap to $0.5768.