Message from FOMC Meeting: Higher for Longer

As widely expected, the FOMC kept its target range for the federal funds rate unchanged at 5.25%-5.50% at today's policy meeting. The decision to keep rates unchanged was unanimously supported by all twelve voting members of the Committee.

Fed Review: Upbeat on Growth

The Fed maintained Fed Funds Rate target unchanged at 5.25-5.50% as widely anticipated, but surprised hawkishly with clearly more optimistic projections. Median growth forecasts were revised higher for 2023-2024, warranting a 50bp upward revision to both 2024 & 2025 median rate projections.

NZ First Impressions: GDP June Quarter 2023

As widely anticipated, New Zealand’s GDP rebounded in the June quarter. Indeed, Statistics NZ reported a 0.9% lift in production – an outcome was well above the market forecast of 0.4% and the Reserve Bank’s most recent forecast of 0.5%. However, it was just 0.1ppts firmer than Westpac’s top of the market estimate of 0.8%.

Central Bank Bonanza

A packed central bank day kicks off with Riksbank which we expect to hike rates by 25bp to 4% in line with consensus view. We expect this to be the final hike in the cycle but risks remain skewed on the upside, and we believe Riksbank will leave door open for November. See more below.

What Will the BoE Do?

Up until yesterday, the expectation was an almost certain 25bp hike from the BoE at today’s meeting, but yesterday’s shocker inflation data has shaken these expectations. In fact, no one, and even less the BoE Chief Bailey himself, was expecting to see softer inflation in Britain last month, when oil prices spiked and sterling fell. Therefore, the surprising nature of yesterday’s data release should prevent the BoE from announcing a surprise rate pause today. Because:

Markets Heed Hawkish Fed

Risk sentiment was forced to turn lower as the Fed delivered its higher-for-longer messaging to markets, projecting fewer-than-anticipated rate cuts for 2024. With potentially one more rate hike to come this year, the US dollar moved back closer to its year-to-date high while global equities tumbled, though spot gold was able to mitigate its losses.

The Battle for Oil. OPEC Strikes Back

The past several weeks have been a real triumph for the bulls in the oil market. The Brent spot price grew by 8.5% during the last month.

A Surprisingly Dovish BoE But Another Rate Hike Still Possible

We're certainly seeing plenty of different approaches from central banks as they wrap up their tightening cycles, with the Bank of England today surprising with a hold while not adopting a particularly hawkish tone alongside it.

Franc Weakens as SNB's Logical Move Surprises Markets

The Swiss National Bank left its key interest rate unchanged at 1.75%. On average, markets had been predicting a 25-basis point hike, contrary to our expectations.

Swiss Sinks on SNB Surprise, Fed Pauses

The Swiss franc has fallen sharply on Thursday. In the European session, USD/CHF is trading at 0.9060, up 0.80%. Earlier, USD/CHF hit a high of 0.9078, its highest level since June 13th.