{"id":6806,"date":"2024-03-21T09:13:20","date_gmt":"2024-03-21T09:13:20","guid":{"rendered":"https:\/\/hamiltoncourtfx.com\/?p=6806"},"modified":"2024-03-21T09:13:21","modified_gmt":"2024-03-21T09:13:21","slug":"markets-react-to-feds-forward-guidance-ahead-of-boe-today","status":"publish","type":"post","link":"https:\/\/hamiltoncourtfx.com\/it\/markets-react-to-feds-forward-guidance-ahead-of-boe-today\/","title":{"rendered":"Markets React to Fed’s Forward Guidance ahead of BoE Today"},"content":{"rendered":"
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Thought for Thursday<\/strong><\/h4>\n

\u201cHe who knows only his own side of the case knows little of that” – John Stuart Mill\u00a0<\/strong><\/span><\/h4>\n<\/div>\n <\/div>\n <\/div>\n <\/div>\n<\/div>\n\n\n
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Federal Reserve\u2019s Forward Guidance<\/h2>\n <\/div>\n
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Last night the Federal Reserve met market expectations in maintaining their benchmark policy target rate of 5.25-5.5% – its highest level in 23 years. This marked the fifth consecutive hold as policy makers said that inflation was \u201csometimes a bumpy road towards 2%\u201d.<\/p>\n

Nevertheless, markets were buoyed on the release of the Fed\u2019s dot plot which indicated that there would be three rate cuts this year \u2013 in line with previous forward guidance from the FOMC. Looking further ahead, the dot plot also indicated the Fed making three cuts next year, a downward revision from their guidance in December which indicated four such cuts. With the Fed then expecting to make three rate cuts in 2026, there is some debate over whether the natural rate will shift higher.<\/p>\n

Elsewhere, the Fed indicated the growth would be higher than expected with forecasts pointing to GDP growing 2.1% this year \u2013 up from the 1.4% figure projected in December. In relation to the labour market, the Fed said \u201cJob gains have remained strong, and the unemployment rate has remained low\u201d as policy makers revised unemployment projections 10bps lower.<\/p>\n

With the release of yesterday\u2019s Dot Plot from across the pond, attention now turns to the Bank of England\u2019s Monetary Policy Committee meeting and minutes released at 12noon today. Similarly, while the consensus is projecting a hold, markets are looking for further forward guidance from policy makers.<\/p>\n <\/div>\n <\/div>\n <\/div>\n<\/div>\n\n

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Retal Prices Soar<\/h2>\n <\/div>\n
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ONS data released yesterday indicated that UK rental costs rose at their highest level since records began in 2015. With rental costs increasing at an average 9% across the UK, some areas including London saw rent increase by double figures. This also marked a 50bps uptick in the annual rate of increase last month.<\/p>\n

Kensington and Chelsea recorded the highest monthly rental costs at \u00a33,248 which when looking at places outside London was followed by Bristol at just over \u00a31,700. This came against an average of around \u00a31,225.<\/p>\n

The rise in rental comes against a fall in house prices which declined 0.6% between January 2023 and 2024.<\/p>\n

The increase in rental come as landlords pass on higher mortgage costs and taxes to tenants or remove their property from the rental market causing a supply side squeeze. According to the NRLA for example, 21% of landlords sold a property within the last 12 months against 8% who bought.<\/p>\n <\/div>\n <\/div>\n <\/div>\n<\/div>\n\n

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Eurozone<\/h2>\n <\/div>\n
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Speaking at a press conference yesterday the President of the ECB Christine Lagarde said that Frankfurt could not commit to a future interest rate pathway after the central bank makes its first move.<\/p>\n

Against market expectations of a first cut in June, Lagarde gave little indication on when the central bank may first start to ease rates and instead reiterated that their pathway would be guided by data. Here, Lagarde said that \u201cwhen it comes to the data that is relevant for our policy decisions, we will know a bit more by April and a lot more by June.\u201d She continued by stating that this \u201cimplies that, even after the first rate cut, we cannot pre-commit to a particular rate path.\u201d<\/p>\n

During their last policy meeting, the ECB\u2019s met market expectations in leaving rates unchanged for the fourth consecutive time. Since then, the latest data release showed headline inflation showed signs of easing from 2.8% in January to 2.6% in February while powerhouses such as Germany and France continue to face headwinds with the main refinancing rate at 22-year highs.<\/p>\n

Sticking with the Eurozone, yesterday the currency union\u2019s consumer confidence rose to its highest level in two years yesterday according to data released by the European Commission. This comes as consumer sentiment shows signs of improving over inflation coming down and expectations of interest rates subsiding on the horizon.<\/p>\n <\/div>\n <\/div>\n <\/div>\n<\/div>","protected":false},"excerpt":{"rendered":"

Thought for Thursday, benchmark policy target rate maintained by Federal Reserve, UK rental prices are at the highest levels since records began, and ECB President speaks about future Eurozone rates. <\/p>","protected":false},"author":15,"featured_media":2016,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"rp-language":[16],"class_list":["post-6806","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-morning-updates","rp-language-en_gb"],"_links":{"self":[{"href":"https:\/\/hamiltoncourtfx.com\/it\/wp-json\/wp\/v2\/posts\/6806","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/hamiltoncourtfx.com\/it\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hamiltoncourtfx.com\/it\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/hamiltoncourtfx.com\/it\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/hamiltoncourtfx.com\/it\/wp-json\/wp\/v2\/comments?post=6806"}],"version-history":[{"count":10,"href":"https:\/\/hamiltoncourtfx.com\/it\/wp-json\/wp\/v2\/posts\/6806\/revisions"}],"predecessor-version":[{"id":6816,"href":"https:\/\/hamiltoncourtfx.com\/it\/wp-json\/wp\/v2\/posts\/6806\/revisions\/6816"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/hamiltoncourtfx.com\/it\/wp-json\/wp\/v2\/media\/2016"}],"wp:attachment":[{"href":"https:\/\/hamiltoncourtfx.com\/it\/wp-json\/wp\/v2\/media?parent=6806"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hamiltoncourtfx.com\/it\/wp-json\/wp\/v2\/categories?post=6806"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hamiltoncourtfx.com\/it\/wp-json\/wp\/v2\/tags?post=6806"},{"taxonomy":"rp-language","embeddable":true,"href":"https:\/\/hamiltoncourtfx.com\/it\/wp-json\/wp\/v2\/rp-language?post=6806"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}