The Fed, which has increased the policy rate at every meeting since March last year, paused these steps after 15 meetings.
While the Fed kept the policy rate unchanged at 5-5.25 percent as expected, the Fed’s statement said, “Tighter credit conditions for households and businesses are likely to put pressure on economic activity, hiring and inflation.” expression was used.
Announcing its forecasts for the economy, the Fed increased its forecast for the federal funds rate from 5.1 percent to 5.6 percent for the end of this year.
The Fed’s forecast for the federal funds rate for 2024 was revised from 4.3 percent to 4.6 percent, and for 2025 from 3.1 percent to 3.4 percent. The long-term average interest rate expectation was kept at 2.5 percent.
The Bank’s inflation forecasts were cut from 3.3 percent to 3.2 percent this year, while maintaining 2.5 percent for 2024 and 2.1 percent for 2025.
Estimates for core inflation, which does not include variable energy and food prices, were also raised to 3.9 percent from 3.6 percent for this year.
Fed Chairman Jerome Powell said after the meeting that nearly all Fed officials thought some additional rate hikes would be appropriate this year to bring inflation down to 2 percent over time.
Emphasizing that the decision taken is only about this meeting, Powell said, “We have not made a decision about the July meeting.” said.
After these developments, the expectations that the Fed will raise interest rates by 25 basis points at the July meeting in the pricing in the money markets rose to 70 percent, while there is also a limited prediction that the Bank can complete the interest rate hike cycle at the level of 5.50-5.75 percent.
As the volatility in commodity prices increased as yesterday’s decisions were perceived as more “hawk” than expectations, the price of gold tested the lowest level since March 17 at $ 1,930 in the new day.
On the other hand, according to the data released in the USA yesterday, the Producer Price Index (PPI) increased by 1.1 percent year on year, well below the expectations.
With these developments, the S&P 500 index rose by 0.08 percent and the Nasdaq index rose by 0.39 percent, while the Dow Jones index decreased by 0.68 percent in the New York stock market yesterday. Index futures contracts in the USA started the new day with a mixed course.
While a buying-heavy trend was prominent in Europe yesterday, today’s eyes were turned to guidance by the ECB’s monetary policy decisions and the ECB President Christine Lagarde’s post-meeting speech.
While it is considered certain that the ECB will increase the policy rate by 25 basis points today, according to the pricing in the money markets, potential clues about the future are in the focus of investors in the policy text and Lagarde’s statements.
Yesterday, the FTSE 100 index rose by 0.10 percent in the UK, the DAX 40 index rose by 0.49 percent in Germany, the CAC 40 index rose by 0.52 percent in France and the MIB 30 index rose by 0.88 in Italy. Index futures contracts in Europe started the new day with a decline.
While the stock markets in Asia started the day with an increase, excluding South Korea, the People’s Bank of China (PBoC) continues its steps to support the economy.
PBoC lowered the 1-year loan rate by 10 basis points to 2.65 percent today, while increasing the amount of funding. On the other hand, according to the data announced in the country today, industrial production increased by 3.5 percent and retail sales increased by 12,7 percent annually.
Core machinery orders in Japan, on the other hand, surpassed expectations with an increase of 5.5 percent, while the foreign trade balance gave a deficit of 1 trillion 372.5 billion yen.
While the Nikkei 225 index rose 0.3 percent in Japan near the closing, the Hong Kong Hang Seng index rose by 1.7 percent and the Shanghai composite index in China increased by 0.5 percent, the Kospi index in South Korea decreased by 0.1 percent.
BIST 100 index in Borsa Istanbul, which carried its sales-weighted course to the third day yesterday, closed the day at 5,360.77 points, 1.26 percent below the previous closing.
Dollar/TL is traded at 23.5840 at the opening of the interbank market today, after closing at 23.5639 with a decrease of 0.3 percent yesterday.
Analysts stated that today, in addition to the budget balance and housing sales index in the country, the ECB’s interest rate decision and Lagarde’s statements abroad, foreign trade balance in the Euro Area, capacity utilization rate and industrial production data in the USA will be followed. In terms of BIST 100 index, 5.250 and 5.150 levels are in the support position, and 5.400 and 5.500 points are in the resistance position.
