J.P. Marín-Arrese | The Fed kept rates on hold this week. Yet, Jerome Powell shattered hopes they had reached a ceiling, announcing in the press conference that an extra hike was in the pipeline before the year-end. Inflation is still running too high and will likely take much longer than expected to match its medium-term goal. Powell was at odds in justifying why rate stiffening has neither cooled the economy…
Bankinter| On Wednesday, the Minutes of the last Fed meeting (25/26 July) were published. On that occasion the Fed raised rates +25 b.p. to 5.25%/5.50% and insisted on following a data-dependent approach in future meetings. In the minutes most participants insist on the need to continue to fight inflation, which remains high (+3.2% in July for headline and +4.7% for core). On the other hand, some members warned of the…
Bankinter | The Fed met expectations and raised its benchmark interest rate (Fed Funds) by +25 b.p. to 5.25%/5.50% on Wednesday, leaving the door open for more hikes. Assessment: The most relevant thing is that it leaves open the possibility of a new tightening in September by maintaining a data-dependent approach. The most relevant aspect of this meeting was Powell’s message. In the dot plot of the June meeting, the…
Banca March| The Fed has proposed, in its role as supervisor of the US banking sector, to apply stricter controls on capital levels to a larger number of institutions. This role will include, according to the new plan, those financial institutions with assets of at least $100 billion. According to Michael S. Barr, vice-president for supervision, with this new threshold, a greater number of institutions will be subject to stricter…
Bankinter: The minutes of the Fed’s 13/14 June meeting show a broad consensus on the decision for a pause in rate hikes although a majority of directors (16 out of 18) believe that some additional rate hikes in the future from the current level of 5.00%-5.25% are appropriate. There is also a consensus that rates should remain in tightening territory until inflation reaches its 2% target. The minutes hardly change…
Bankinter| In his appearance before Congress, Powell maintained the tone and vagueness of his message. Congress has focused most of its questions on banking regulation. Meanwhile, Powell focused his message on inflation control, but without specifying the future. Analysis team’s view: The Fed governor reinforced the stability of the banking sector. But, he did not specify the future of regulation. Powell expects to receive a proposal during the summer. However,…
CoM | The US Federal Reserve (Fed) decided on Wednesday to pause interest rate hikes and keep them in a range of between 5 and 5.25%, after a historic round of ten consecutive rate hikes since March 2022. “Recent indicators suggest that economic activity has continued to grow at a moderate pace. Employment growth has been solid in recent months and the unemployment rate has remained low,” the agency said…
Link Securities| The minutes of the May Federal Open Market Committee (FOMC) meeting showed that its members were divided on the need for further increases in the benchmark interest rate. In this regard, it was said that, based on expectations of a slow return of inflation to 2%, a further firming of monetary policy at future meetings was likely to be warranted. In general, participants were unsure how much further…
Link Securities | The Federal Reserve’s latest Beige Book indicates that overall economic activity and the economic outlook have remained broadly unchanged in recent weeks in most districts, although two districts saw a deterioration in their future outlook. The report noted that consumer spending and manufacturing posted flat or slightly lower growth, although auto sales were steady and travel and tourism rebounded. Banks also recorded a tightening of their lending…
Bankinter | Fed members unanimously decide to raise rates by +25bp, the same rate hike they did in February and which compares to the +50bp hike in December. The minutes reiterate the message of the previous meeting that inflation remains elevated and that its deceleration is slower than expected. Strong labour market and GDP growth support price increases. All members approve of raising rates by +25bp and continuing to reduce…