Home Business From the Fed to the BoE roundup of announcements from central banks. Markets cautious, on Wall Street futures slightly lower

From the Fed to the BoE roundup of announcements from central banks. Markets cautious, on Wall Street futures slightly lower

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On Wall Street, futures on the main US stock indices report a slightly downward trend, which is explained by the umpteenth maxi rate hike by the Fed by Jerome Powell, and in the determination of the central bank itself to move forward in the path of tightening. monetary, in order to bring inflation back to the 2% target.

At around 2 pm Italian time, Dow Jones futures are down by 0.08%; those on the S&P 500 fall by 0.16%, those on the Nasdaq Composite fall by 0.28%.

The Federal Reserve, the US central bank, has raised the main reference rates of the United States by 75 basis points, as expected, confirming its intention to proceed with further monetary tightening to fight inflation, which has been traveling to the highest levels since the beginning. of the 80s.

The rates were brought into the range between 3% and 3.25%, the record since 2008, with what was the third consecutive squeeze of 75 basis points.

Pay attention to the dot plot, the table that summarizes the projections on the direction of the rates of the exponents of the FOMC, the monetary policy arm of the Fed.

The dot plot shows that officials are aiming for new rate hikes to reach the terminal rate of 4.6% in 2023. The median estimate of FOMC officials showed that Fed officials predict that rates will rise up to 4 , 4% by the end of 2022. Powell & Co are therefore preparing to raise rates to 100-125 basis points by the end of the year, in the two remaining meetings of the FOMC.

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Also from the dot plot, up to three rate cuts emerged in 2024 and another four in 2025, which would lead to longer-term rates to fall to a median value of 2.9%.

“My main message has not changed since Jackson Hole – said Jerome Powell, head of the Fed, in the press conference that followed the announcement on US rates – The FOMC is strongly determined to bring inflation back to 2%, we will continue until the work is completed ”.

“We have to put inflation behind us. I wish there was a less painful way to do it. There isn’t, ”admitted the president of the US central bank.

Today was the day in which central banks were the protagonists.

Haruhiko Kuroda’s Bank of Japan continues to confirm itself as a white fly among the central banks of many other economies, committed to averting and taming new flares of inflation.

Today, the central bank of Japan confirmed the reference interest rates at the minimum level ever, or -0.1%, which means that monetary policy is still based on the instrument of negative rates, at which the ECB Christine Lagarde has now given up on her monetary straits.

On the other hand, the era of negative rates in Switzerland is over, where the Swiss National Bank (SNB) raised its reference interest rates to 0.5%, with an increase of 75 basis points.

Inflation in Switzerland is currently at its highest in three decades, reaching 3.5% last month.

A little while ago came the announcement from the Bank of England, which announced that it had raised the UK key benchmark rate by 50 basis points, less than the 75 point squeeze expected by several traders, to 2.25% from 1. , 75% earlier.

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Monetary tightening was the seventh in a row and has driven rates to a record 14-year record since 2008. The Bank of England announced today that it believes the UK is already in recession.

Yesterday the Dow Jones Industrial Average slipped 522 points (-1.70%), after leaping more than 300 points in its intraday highs; the S&P 500 lost 1.71%, the Nasdaq Composite fell 1.79%.

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