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Mixed Signals from Fed? | BOE Leaves Rates Unchanged

Published December 20, 2018
  • The US Federal Reserve raised interest rates to 2.50% as expected. However, the press conference that followed has led many market participants to believe that there may be too much tightening from the central bank in the near term, with Powell stating balance-sheet reductions will continue. This immediately led to the worst equity market decline for any Federal Open Market Committee on announcement day.
  • A barrel of West Texas Intermediate dropped more than 1.8% this morning as the latest selloff indicates increasing reservations regarding the US Federal Reserve decision.
  • The Bank of England kept interest rates unchanged this morning as the Monetary Policy Committee voted to hold at 0.75%. UK policy makers stated that they now see inflation slowing below the 2% target as soon as January. Uncertainty surrounding the United Kingdom’s exit from the European Union was viewed as intensifying by the central bank.
  • The Bank of Japan left stimulus settings unchanged early this morning, with risks to inflation growing. Additionally, the BOJ left its yield curve control program and asset purchases unchanged.