August 9, 2024
United States:
Fed Seen Rejecting Calls for Jumbo Rate Cut in Economist Survey
A large majority of economists surveyed see only a quarter-point decrease in interest rates coming in September — a finding that’s at odds with calls from some large Wall Street banks for a jumbo cut at the next meeting.
Nearly four-fifths of economists surveyed by Bloomberg predict the Federal Reserve will trim rates to a range of 5% to 5.25% at its September 17-18 meeting, with most of the rest predicting a larger reduction. The median forecast shows just 10% odds for a rare move to adjust rates prior to the scheduled gathering.
United Kingdom:
Pound’s Big Rally Fizzles as Rate Cut and Market Turmoil Take Toll
Sterling won new fans after the Labour Party’s election win. Now, currency traders are looking for reasons to stay optimistic as pressure mounts.
Investors were already cautious after the Bank of England’s first interest-rate cut since 2020 at the start of the month, but they didn’t foresee the weak US data and ructions in Japan’s markets that triggered a global rout in the days that followed. In the UK, anti-immigration riots and the prospect of tax hikes have dimmed the post-vote euphoria and done nothing to slow the pound’s tumble from a one-year high.
Asia:
BOJ’s Policy Path Fraught With Risks After Global Market Turmoil
Bank of Japan Governor Kazuo Ueda’s path to policy normalization got a lot rockier after market ructions this week, leaving him facing multiple risks ahead.
When he took the helm at the BOJ in April of 2023, Ueda inherited a complex monetary framework that seemed almost impossible to exit. After more than a decade of unconventional monetary easing, the bank held more than half of the market for Japan’s government bonds. And yet, after ending the world’s last negative interest rate in March, Ueda appeared to be moving smoothly toward normalization.
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