Financial news on December 15: At 3 a.m. Beijing time today, the Federal Reserve announced its December interest rate decision, raising interest rates by 250 basis points as scheduled to a range of 4.25%-4.5%. The federal funds interest rate target range hit the highest level since 2007. Since raising interest rates by 25 basis points in March, the Fed has raised interest rates by a total of 425 basis points this year.
The decision to raise interest rates by 50 basis points points to a slowdown in rate hikes, but the hike comes with signs that officials expect to keep rates higher next year and not cut rates until 2024.. According to the dot plot released by the Federal Reserve, the median forecast for interest rates is 5.1% in 2023 and 4.1% in 2024. Both figures are higher than previous forecasts.
(Dot plot released by the Federal Reserve in December Source: Federal Reserve official website)
At the subsequent monetary policy press conference, Federal Reserve Chairman Powell said that the Federal Reserve expects continued interest rate hikes to help restore the inflation rate to the 2% target. He also pointed out that no interest rate cut is expected in 2023, and the extent of the rate increase announced at the meeting in February next year will depend on economic data.
Topix Futures analysis said that the December interest rate meeting was a hawkish meeting. With policy interest rates about to peak, the market has entered into a game of maintaining restrictive interest rates, and the game of long-term recessionary pressure and short-term high inflation will become more intense. We believe that we need to continue to wait for significant changes in the marginal conditions of the U.S. labor market to change policy preferences. Therefore, the current fluctuations are not a change in trend, but a change in rhythm. Recession trading will continue, and it is difficult for the U.S. bond yield center to move upward.
htmlThe last interest rate decision in 5 years! 24 hours Central banks around the world have staged interest rate hikes
In less than 24 hours after the Federal Reserve announced its interest rate decision, the European Central Bank , the Bank of England, the Swiss National Bank, Norges Bank , the Bank of the Philippines, the Bank of Mexico, etc. will also announce the last interest rate decision of the year.
As of press time, the Hong Kong Monetary Authority, the Macau Monetary Authority, the Philippine Central Bank, the Swiss National Bank, and the Norwegian Central Bank have announced interest rate decisions today.
The Hong Kong Monetary Authority announced in the morning that the base interest rate will be set at 4.75% based on a preset formula, effective immediately. The Monetary Authority of Macau raised the discount window base interest rate by 50 basis points to 4.75%.
Given that the Macau pataca is pegged to the Hong Kong dollar, changes in the policy interest rates of the two places must be basically consistent to maintain the effective operation of the Hong Kong-Macao linked exchange rate system. Therefore, the Monetary Authority of Macau follows the Hong Kong Monetary Authority in adjusting its base interest rate. Under the linked exchange rate system where the Hong Kong dollar is pegged to the U.S. dollar, based on the U.S. Federal Reserve raising the federal funds rate target range by 50 basis points on December 14 (U.S. time), the Hong Kong Monetary Authority adjusted the relevant interest rates according to a preset formula.
At 15:00 Beijing time, the Philippine central bank raised the benchmark interest rate by 50 basis points to 5.5%, reaching a 14-year high. In a country that relies on imports of key commodities such as fuel and rice, the Philippine central bank has signaled more tightening measures to curb the fastest inflation in years.
At 16:30 Beijing time, the Swiss National Bank raised interest rates by 50 basis points as scheduled, with the policy interest rate rising from 0.5% to 1%. The interest rate level was the highest since October 2008. Since this year, the European Central Bank has raised its policy interest rate by 200 basis points, and the deposit mechanism interest rate has increased from -0.5% to 1.5%. The SNB must avoid a widening of the interest rate differential with the ECB.
At 16:30 Beijing time, the Norges Bank raised the key policy interest rate by 25 basis points to 2.75% as expected.
Focus on the European Central Bank and the Bank of England, which are generally expected to raise interest rates by 50 basis points
At present, the industry generally expects that the European Central Bank and the Bank of England may also raise interest rates by 50 basis points, while the borrowing costs of other central banks are also expected to rise.
Since July, the European Central Bank has raised interest rates by a total of 200 basis points, setting a record for the fastest rate in history. In the past two interest rate meetings, it even raised interest rates by a radical 75 basis points. The Bank of England was also "not to be outdone" and adopted aggressive interest rate hikes of 75 basis points several times, with interest rates rising to the highest level since November 2008.
According to a survey, 48 out of 51 economists expect the European Central Bank to raise interest rates by 50 basis points on Thursday. The European Central Bank has made it clear that it will slow down the pace of interest rate hikes. Even some hawkish officials such as German Bank of Germany President Nagel and Dutch Central Bank President Nott also said they are willing to compromise. If the European Central Bank raises interest rates by 50 basis points on Thursday, it will make interest rates 250 basis points higher than in July.
Amid a slowing economy, high inflation and an extremely tight labor market, the Bank of England is widely expected to raise interest rates by 50 basis points, taking the main bank interest rate to 3.5%, a slowdown from the 75 basis points hike in November, the largest rate hike in 33 years.
This article comes from the financial world
