The Fed announced its monetary policy decisions yesterday after the collapse of 3 banks in the country and the process in which the expectations in the markets were turned upside down.
The Bank increased the policy rate by 25 basis points, in line with expectations, to the range of 4.75-5 percent, the highest level in 16 years.
The US banking system is “solid and resilient”, the Fed said in a statement, adding that recent developments are likely to result in tighter credit conditions for households and businesses and put pressure on economic activity, hiring and inflation.
Announcing its forecasts for the economy, the Fed did not change its forecasts for the federal funds rate for this year. While leaving its forecast for the federal funds rate at 5.1 percent for the end of this year, the bank increased it to 4.3 percent from 4.1 percent for 2024.
Answering questions after the meeting, Powell said, “Members do not have such a foresight.” replied in the form.
Interest rate cut is expected
Underlining that the bank will continue its fight against inflation, Powell emphasized that while evaluating the need for further interest rate hikes, they will focus on the incoming data, the changing outlook and especially the unexpected effects of the credit tightening.
As for pricing in money markets, it is estimated that the Fed will cut interest rates with an 80% probability at its June meeting this year.
On the other hand, the statements made by the US Treasury Secretary Janet Yellen in the US Senate also led to the strengthening of the sales in the stock markets.
Yellen, in the session she attended in the Senate on the 2024 fiscal year budget, stated that they did not work on insuring all bank deposits.
Shares of regional banks fell after Yellen’s statements, while the shares of First Republic Bank, one of the banks mentioned in the banking crisis in the USA, lost more than 15 percent.
Yesterday, the S&P 500 index fell by 1.65 percent, the Dow Jones index by 1.63% and the Nasdaq index by 1.60 percent in the New York stock market. Index futures contracts in the USA started the new day with an increase.
Positive trend prevails in European stock markets
While the positive course continues to be effective in European stock markets as the banking crisis subsides for now, European Central Bank (ECB) President Christine Lagarde, who made a statement yesterday, stated that they are determined to ensure price stability.
Stating that inflation pressures remain strong, Lagarde said that the ECB will continue to make data-driven decisions.
According to the data released in the UK yesterday, the Consumer Price Index (CPI) surpassed expectations with an increase of 10.4 percent in February, while it is predicted that the Bank of England (BoE) will not slow down in interest rate hikes in money markets.
While it is considered certain that the BoE will increase interest rates by 25 basis points at today’s meeting, it is expected that the directions for the next period will also have an impact on the direction of the markets.
While DAX 40 index increased by 0.14 percent in Germany, FTSE 100 index increased by 0.41 percent in Germany and CAC 40 index increased by 0.26 percent in France, MIB 30 index decreased by 0.12 percent in Italy.
mixed cruise in Asia
While a mixed course stands out in Asian stock markets, the signals that economic activity is gaining strength in the region continue to increase.
Shares of Chinese internet giant Tencent Holding gained nearly 6 percent after the increase in advertising revenues.
While the Nikkei 225 index decreased by 0.2 percent in Japan near the closing, the Shanghai composite index increased by 0.4 percent in China, the Kospi index in South Korea increased by 0.1 percent and the Hang Seng index in Hong Kong increased by 1.5 percent.
Eyes on the interest rate decision
Domestically, the BIST 100 index in Borsa Istanbul, which followed a buying-heavy course yesterday, finished the day at 5.001.06 points, 1.92 percent above the previous closing.
Today, while the eyes are turned to the monetary policy decisions of the CBRT, most economists expect the bank to keep the policy rate constant.
Dollar/TRY is trading at 19,0430 at the opening of the interbank market today, after closing at 19,0440 with an increase of 0.1 percent yesterday.
Analysts stated that today, in addition to the CBRT and BoE’s interest rate decisions, the intense data agenda will be followed, especially new house sales and unemployment benefits applications in the USA, and technically, 4.900 and 5,000 levels in the BIST 100 index are in the support position and 5.080 and 5.200 points are in the resistance position. He recorded that he was coming.
