Money

U.S. Fed may soon end interest rate hikes

Published

5 months ago

July 11, 2023

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The central bank whose decisions impact so much of the global economy has been closely watched for signs on monetary policy direction

The U.S. Federal Reserve may be nearing the end of its monetary tightening policy, several bank officials said on Monday, however they also indicated a few more rate rises will still be in store for the year.

The Fed has already implemented a total of 5 percentage points in rate hikes since March 2022 to combat the highest U.S. inflation in four decades.

In their most recent meeting, policymakers chose to postpone a rate increase to assess the impact of previous hikes on borrowing costs. Nonetheless, most officials anticipate at least two more increases by the end of 2023.

San Francisco Fed President Mary Daly expressed a common sentiment among her peers, stating that a couple more hikes may be necessary this year to bring inflation back in line with the Fed’s target of 2%.

Daly also acknowledged that the risks of doing too little are gradually aligning with the risks of overdoing rate hikes as the Fed approaches the final phase of its tightening cycle.

She emphasised the importance of data-dependence and supported the cautious approach taken in June, allowing for a more thorough assessment of economic indicators.

Daly highlighted the significance of incoming data in determining future policy decisions, suggesting that the Fed may adjust its approach based on evolving circumstances.

The expectation is that the Fed will raise rates at their upcoming meeting, potentially bringing the policy rate to the range of 5.25%-5.50%.

However, the timing of subsequent rate hikes is less certain, with possibilities ranging from the September meeting to November or even a decision to maintain rates and allow inflation to gradually ease.

Fed Chair Jerome Powell has previously noted that he cannot rule out consecutive rate hikes to address stubbornly high inflation.

Although inflation, as measured by the personal consumption expenditures index, has declined from its peak of 7% last year to 3.8% in May, it remains nearly twice the Fed’s target.

The ultimate path of rate increases will depend on future economic data and its implications for inflationary pressures. The Fed aims to strike a balance between addressing inflation concerns and avoiding excessive tightening that could hinder economic growth.

“We still have a bit of work to do,” Fed Vice Chair for Supervision Michael Barr said on Monday at a separate event. “I’ll just say for myself, I think we’re close.”

Related Topics:Featured inflation U.S. Fed

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Bank accidentally deposits $86M into client’s account

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16 hours ago

December 3, 2023

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A financial institution mistakenly deposited over $86 million into a client’s account, causing shockwaves in the banking industry.

The error came to light when the client, a small business owner, checked their account balance and discovered the astronomical sum. It is being hailed as one of the most significant banking errors in recent memory.

The client, who wishes to remain anonymous, reportedly contacted the bank immediately upon noticing the massive windfall. Bank officials were left scrambling to rectify the error, which has raised numerous questions about the institution’s internal controls and safeguards.

The client’s account, initially holding just a few thousand dollars, suddenly displayed a balance that could buy luxury yachts, mansions, and more.

The incident has prompted investigations by regulatory authorities to determine how such an egregious error occurred in the first place.

While the bank has issued an apology and assured the client that the funds will be corrected to the proper balance, it remains unclear how this mistake could have happened on such a colossal scale.

The financial institution may also face potential legal consequences for the error, as well as reputational damage that could impact its future business.

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Tech giants drive global mega-cap surge amid inflation relief

Published

2 days ago

December 1, 2023

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Tech giants have taken the lead in propelling global mega-cap stocks to new heights.

This surge comes as a welcome relief for investors who have been closely monitoring the impact of rising inflation on the financial markets.

The tech sector, including giants like Apple, Amazon, and Microsoft, has been instrumental in driving the rally. These companies have reported robust earnings and strong growth prospects, which has boosted investor confidence. As a result, the market capitalization of these tech behemoths has reached unprecedented levels, contributing significantly to the overall rise in global mega-cap stocks.

The easing of inflationary pressures has played a pivotal role in this resurgence. Central banks’ efforts to tame inflation through monetary policy adjustments have begun to bear fruit, reassuring investors and stabilizing financial markets. As concerns over rapidly increasing prices recede, investors have become more willing to invest in mega-cap stocks, particularly in the tech sector, which has demonstrated resilience in the face of economic challenges.

Will the tech giants maintain their momentum and continue to lead the mega-cap surge, or are there potential risks on the horizon?

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Real reason bosses want employers back in the office

Published

4 days ago

November 30, 2023

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As the world gradually recovers from the pandemic, employers are increasingly pushing for their staff to return to the office after years of remote work.

The driving force behind this push is the sharp decline in commercial property values, which has left many businesses concerned about their real estate investments.

Commercial property values have plunged in the wake of the pandemic, with many companies downsizing or reconsidering their office space needs.

This has put pressure on employers to reevaluate their remote work policies and encourage employees to return to the office. #featured