Monetary policy news covering interest rates, quantitative easing, central bank decisions, and money supply management.
Morgan Stanley changed its forecast late Monday to predict a Federal Reserve interest rate hike, joining Goldman Sachs just before the FOMC meeting. Bank of America's survey shows expectations for a pre-midterm rate hike have doubled, with 41% of fund managers anticipating an increase as investors view current policy as too stimulative.
Brent crude rose 2.9% to $107.66 per barrel as Middle East tensions drove supply fears. A merchant vessel was struck in the Strait of Hormuz, killing one crew member. The IEA downgraded its global oil supply forecast, while US diesel prices crossed $6 a gallon for the first time in history.
The Federal Reserve is anticipated to raise its benchmark interest rate, defying months of political pressure from President Trump to cut rates ahead of midterm elections. This decision highlights the central bank's independence from White House demands for lower monetary policy costs.
Wage growth in the UK decelerated to 3.9% in the three months to July, easing pressure on the Bank of England as it prepares to set interest rates. Average weekly earnings excluding bonuses grew by 3.5%, while job vacancies fell to a four-year low of 702,000 in August.
President Donald Trump urged the Federal Reserve to set the world's lowest interest rates ahead of its meeting, following a CPI report showing the largest inflation increase in four months. Traders currently price in an 86% chance of a rate increase on Wednesday. The Fed faces pressure from Kevin Warsh and Trump regarding rate decisions.
Logan Mohtashami contends that a new Federal Reserve rate-hike cycle will likely increase, rather than decrease, mortgage rates. He argues that historical data shows rising Fed funds rates typically correlate with higher 10-year yields, driven by persistent inflation factors like AI spending and geopolitical conflicts, contradicting the view that hawkish policy stabilizes housing costs.
MarketWatch argues that the Federal Reserve must determine if rising global bond yields signal a structural shift toward higher long-term interest rates rather than temporary shocks. The commentary suggests AI-driven capital demand and productivity gains may sustain elevated real interest rates beyond recent cycles.
The article contends that the Federal Reserve is likely to raise interest rates for the first time in three years, driven by persistent core inflation. It argues this move will increase borrowing costs for American homebuyers, despite Chairman Kevin Warsh’s admission of past inflation failures, creating uncertainty for struggling consumers.
UK economists are urging Chancellor John Healey to slow the Bank of England's quantitative tightening program as gilt yields hit their highest level since July 2007. While Governor Andrew Bailey defends the policy, critics warn of potential £120bn in losses to the exchequer if rates remain high.
Macquarie Bank contends that Reserve Bank of Australia officials’ recent language signals a hawkish stance, making an interest rate hike in two weeks nearly certain. This analysis coincides with the US Federal Reserve’s anticipated rate increase, linking domestic monetary policy shifts to global inflationary pressures driven by Middle East oil price spikes.