- The Bank of England raised its benchmark interest rate to 5.25% despite a slowdown in consumer-price rises, leading to speculation about when the central bank will end its monetary tightening.
- House prices in Britain fell by 3.8% in July compared to the same month last year, the sharpest decline since July 2009, but the average house price was still higher than earlier this year.
- The Bank of Japan raised its cap on the yield of Japanese ten-year government bonds from 0.5% to 1%, causing the yield to soar to nine-year highs.
- Turkey's annual inflation rate increased to 47.8% in July, the first rise since October, due in part to a new tax on fuel.
- The euro area's economy grew by 0.3% in the second quarter, with much of the growth attributed to changes in intellectual property shifting by multinationals based in Ireland for tax purposes. Germany's GDP growth rate was zero, and Italy's fell by 0.3%.
The U.S. economy is forecasted to be growing rapidly, which is causing concern for the Federal Reserve and those hoping for low interest rates.
Despite the weakening Israeli shekel and concerns over proposed changes to the country's judicial system, Fitch Ratings believes that the modifications have been sufficiently diluted to avoid causing long-term damage to Israel's resilient economy. Fitch's decision to affirm Israel's credit rating is based on the expectation that the government will not move towards a hard-rightwing stance and that Israel will continue to attract investment and talent.
The majority of economists polled by Reuters predict that the U.S. Federal Reserve will not raise interest rates again, and they expect the central bank to wait until at least the end of March before cutting them, as the probability of a recession within a year falls to its lowest level since September 2022.
Despite a slight increase in Canada's inflation rate last month, the Bank of Canada remains determined to bring it down to 2%, with the possibility of another rate hike being considered in September. However, some economists believe that the positive overall figures may allow the Bank to pause on rate increases without a significant negative impact.
U.S. Federal Reserve Chairman Jerome Powell stated that restrictive monetary policy will continue until inflation slows, and the central bank is prepared to raise rates cautiously; the price of Bitcoin briefly dipped before recovering, while traditional markets saw modest gains.
The president of the Federal Reserve Bank of Philadelphia believes that the US central bank has already raised interest rates enough to bring inflation down to pre-pandemic levels of around 2%.
The spike in retail inflation has raised uncertainty for investors and savers, with expectations of interest rate cuts being pushed to the next fiscal year and the possibility of a rate hike. The Reserve Bank of India projects inflation to stay above 5% until the first quarter of 2024-25, and food price pressures are expected to persist. While inflation may impact stock market returns, gold and bank deposit rates are expected to remain steady.
President of the European Central Bank, Christine Lagarde, stated that interest rates in the European Union will need to remain high to combat inflation, despite progress being made, emphasizing the challenges posed by disruptions in the global and European economies.
The European Central Bank (ECB) will maintain high interest rates for as long as necessary to combat persistent inflation, according to ECB President Christine Lagarde, amid efforts to manage a stagnating economy; however, the ECB is also considering longer-term economic changes that may contribute to sustained inflation pressures.
Cleveland Federal Reserve Bank President Loretta Mester believes that beating inflation will likely require one more interest-rate hike in the U.S. and then pausing for a while, although she may reassess her previous view of rate cuts starting in late 2024, and she aims to set policy so that inflation reaches the Fed's 2% goal by the end of 2025 to prevent further economic harm.
The Federal Reserve is considering raising interest rates again in order to reduce inflation to its targeted levels, as indicated by Fed Governor Michelle W. Bowman, who stated that additional rate increases will likely be needed; however, conflicting economic indicators, such as job growth and wage growth, may complicate the decision-making process.
US inflation remains above 3% as the cost of goods and services rose by 0.2% in July, prompting speculation that the Federal Reserve may freeze interest rates to manage inflation without causing a recession.
The Federal Reserve's preferred inflation gauge increased slightly in July, suggesting that the fight against inflation may be challenging, but the absence of worse news indicates that officials are likely to maintain interest rates.
The Reserve Bank of Australia is expected to keep its key interest rate unchanged at 4.10% as inflation slows, but economists anticipate a final hike in the next quarter.
The U.S. is currently experiencing a prolonged high inflation cycle that is causing significant damage to the purchasing power of the currency, and the recent lower inflation rate is misleading as it ignores the accumulated harm; in order to combat this cycle, the Federal Reserve needs to raise interest rates higher than the inflation rate and reverse its bond purchases.
Israel's economy is strong and stable, but inflationary pressures have not eased as predicted and the shekel has weakened against the US dollar, causing concerns about the impact of the proposed judicial overhaul on the economy.
Bank of Israel Governor Amir Yaron stated that currency intervention to support the weakening shekel will only be necessary in the case of market failures, emphasizing that market forces should dictate the exchange rate amid increased uncertainty in Israel.
Despite the Israeli shekel being the currency that has weakened the most since the COVID-19 pandemic, Finance Minister Bezalel Smotrich claims that the Israeli economy is showing resilience and stability. However, recent data suggests that Israel's economy is struggling to improve, with slow economic growth and decreased consumer spending. The government's pursuit of judicial reform is also causing concern among international credit rating agencies.
Wall Street banks are revising their outlooks for Turkish interest rates as inflation rises faster than expected, with JPMorgan, Morgan Stanley, and Bank of America suggesting that borrowing costs may need to rise higher or quicker in response to the surge in price growth.
The Bank of Canada is expected to maintain interest rates at a 22-year high of 5% despite a contraction in the economy, as inflation remains above the bank's target.
Deutsche Bank strategists warn that the U.S. economy has a greater chance of entering a recession within the next year due to high inflation and the Federal Reserve's aggressive interest rate hike campaign.
Bank of Canada Governor Tiff Macklem suggests that interest rates may not be high enough to bring inflation back down to target, indicating a hawkish approach after keeping borrowing costs at a 22-year high; Macklem highlights the need for more restrictive monetary policy to restore price stability and reduce inflation.
Leading US financial institution JPMorgan Chase & Co. warns that the recent weakening of the Israeli shekel may indicate long-term trends for the currency, citing political risk and a shift in foreign allocation by Israeli investors as contributing factors.
Israel's fiscal deficit has widened to 1.3% of GDP as government spending rises and tax revenue declines, jeopardizing the country's fiscal deficit target amid a global economic slowdown and higher borrowing costs.
The Wall Street Journal reports a notable shift in the stance of Federal Reserve officials regarding interest rates, with some officials now seeing risks as more balanced due to easing inflation and a less overheated labor market, which could impact the timing of future rate hikes. In other news, consumer credit growth slows in July, China and Japan reduce holdings of U.S. Treasury securities to record lows, and Russia's annual inflation rate reached 5.2% in August 2023.
The European Central Bank is expected to see inflation in the euro zone remain above 3% next year, which strengthens the case for an interest rate increase.
Cryptocurrency prices remained stable as inflation in the U.S. surpassed economists' expectations, with Bitcoin trading at around $26,100 and Ethereum experiencing a slight dip of 0.5%. The Federal Reserve will consider this report, among other factors, for its upcoming interest rate announcement on September 20. While inflation has decreased since June, it still exceeds the Fed's target of 2% annually. Core inflation, excluding volatile food and energy costs, decreased to 4.3% in August compared to July's 4.7%.
The Federal Reserve faces a critical decision at the end of the year that could determine whether the US economy suffers or inflation exceeds target levels, according to economist Mohamed El-Erian. He suggests the central bank must choose between tolerating inflation at 3% or higher, or risking a downturn in the economy.
The European Central Bank (ECB) has raised interest rates to a record high of 4% in an attempt to combat rising inflation, but suggests that this increase could be the last for the time being. The ECB expects inflation to fall in the coming years, but acknowledges that higher rates have impacted economic growth projections for the eurozone.
The Russian central bank has raised its key interest rate to 13% in response to inflationary pressures and a weak rouble, and warns that rates will remain high for a considerable period of time, with further rate increases possible in the future.
Israel's annual inflation increased to 4.1% in August, surpassing the central bank's target range of 1%-3%, as consumer prices rose by 0.5%, driven by increases in the cost of fresh vegetables, culture and entertainment, transportation, and housing.
The Bank of England is expected to raise interest rates to 5.5%, potentially marking the end of its tightening cycle, as concerns about a cooling economy grow among policymakers.
The Federal Reserve is expected to keep its benchmark lending rate steady as it waits for more data on the US economy, and new economic projections suggest stronger growth and lower unemployment; however, inflation remains a concern, leaving the possibility open for another rate increase in the future.
The Federal Reserve is leaving its key interest rate unchanged as it moderates its fight against inflation, but plans to raise rates once more this year, as policymakers remain concerned about inflation not falling fast enough.
The US Federal Reserve holds interest rates steady at 5.25% to 5.50%, projects higher rates for next year, and expects stronger economic growth, causing a slight drop in Bitcoin's price.
The U.S. Federal Reserve kept interest rates steady but left room for potential rate hikes, as they see progress in fighting inflation and aim to bring it down to the target level of 2 percent; however, officials projected a higher growth rate of 2.1 percent for this year and suggested that core inflation will hit 3.7 percent this year before falling in 2024 and reaching the target range by 2026.
The Swiss National Bank keeps interest rates unchanged at 1.75% and hints that further tightening may be necessary to ensure price stability, while also warning of a possible global economic slowdown and addressing the risk of energy shortage in Europe.
Central banks, including the US Federal Reserve, European Central Bank, and Bank of England, have pledged to maintain higher interest rates for an extended period to combat inflation and achieve global economic stability, despite concerns about the strength of the Chinese economy and geopolitical tensions.
Central banks around the world may have reached the peak of interest rate hikes in their effort to control inflation, as data suggests that major economies have turned a corner on price rises and core inflation is declining in the US, UK, and EU. However, central banks remain cautious and warn that rates may need to remain high for a longer duration, and that oil price rallies could lead to another spike in inflation. Overall, economists believe that the global monetary policy tightening cycle is nearing its end, with many central banks expected to cut interest rates in the coming year.
The Turkish central bank has increased interest rates by five points to 30% in an effort to combat soaring inflation, which is above expectations, and the bank suggests that more rate hikes are likely in the future.
The Federal Reserve's measure of inflation is disconnected from market conditions, increasing the likelihood of a recession, according to Duke University finance professor Campbell Harvey. If the central bank continues to raise interest rates based on this flawed inflation gauge, the severity of the economic downturn could worsen.
Federal Reserve policymakers Governor Michelle Bowman and Boston Fed President Susan Collins expressed the need to keep interest rates elevated to combat inflation, with Bowman suggesting further rate hikes will likely be needed to bring inflation down to the Fed's 2% target and Collins stating that further tightening is not off the table as progress in battling inflation has been slow.
