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Can U.S. Avoid a Recession This Time?
Over the past 18 months, the Federal Reserve (Fed) has raised rates by 525 basis points (bps), its biggest tightening of monetary policy since 1981. Long-term bond yields have also soared (Figure 1). All but two other major central banks -- the Bank of Japan and the People’s Bank of China -- have also raised interest rates sharply (Figure 2). Yet, the U.S. economy continues to defy expectations. It grew at nearly a 5% annualized pace in Q3 from Q2, and U.S. GDP expanded nearly 3% more than from a year ago despite the Fed rate hikes and a sharply inverted yield curve, which is traditionally considered a harbinger of ... (full story)
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The Bank of England’s Monetary Policy Committee (MPC) sets monetary policy to meet the 2% inflation target, and in a way that helps to sustain growth and employment. At its meeting ending on 1 November 2023, the MPC voted by a majority of 6–3 to maintain Bank Rate at 5.25%. Three members preferred to increase Bank Rate by 0.25 percentage points, to 5.5%. The Committee’s updated projections for activity and inflation are set out in the accompanying November Monetary Policy Report. These are conditioned on a market-implied path for Bank Rate that remains around 5¼% until 2024 Q3 and then declines gradually to 4¼% by the end of 2026, a lower profile than underpinned the August projections. Since the MPC’s previous meeting, long-term government bond yields have increased across advanced economies. GDP growth has been stronger than expected in the United States. Underlying inflationary pressures in advanced economies remain elevated. Following events in the Middle East, the oil futures curve has risen somewhat while gas futures prices are little changed. UK GDP is expected to have been flat in 2023 Q3, weaker than projected in the August Report. Some business surveys are pointing to a slight contraction of output in Q4 but others are less pessimistic. GDP is expected to grow by 0.1% in Q4, also weaker than projected previously. The MPC continues to consider a wide range of data to inform its view on developments in labour market activity, rather than focusing on a single indicator. The increasing uncertainties surrounding the Labour Force Survey underline the importance of this approach. Against a backdrop of subdued economic activity, employment growth is likely to have softene post: BOE'S BAILEY: WATCHING TO SEE IF MORE RATE INCREASES NEEDED BOE: `RESTRICTIVE' POLICY LIKELY NEEDED FOR EXTENDED PERIOD BOE'S BAILEY: WATCHING CLOSELY TO SEE IF FURTHER RATE HIKES ARE NEEDED BOE'S BAILEY: MUCH TOO EARLY TO BE THINKING ABOUT RATE CUTS post: BOE: RISKS TO INFLATION PROJECTIONS STILL SKEWED TO UPSIDE BOE: EMPLOYMENT GROWTH LIKELY SOFTER IN H2 2023 THAN PREVIOUSLY FORECAST BOE: PAY GROWTH HIGH BUT STRONG PRIVATE SECTOR REGULAR EARNINGS NOT APPARENT IN OTHER SERIES post: BoE Summary: - Unch. as expected - 6-3 vote - Rates to be kept sufficiently restrictive - Will hike again if needed - Half of impact from hikes has been felt - Too early to talk of cuts - Inflation seen falling below 2% in Q4'25 - GDP seen flat in 2024
The speed of price rises (inflation) is slowing. Higher interest rates are helping to bring inflation down. Inflation has fallen from a peak of 11% in 2022 to 6.7% in September 2023. We’ve kept interest rates at 5.25% this month. But we are not complacent. Inflation is still too high. We will be watching closely to see if further increases in interest rates are needed. And we will keep interest rates high enough for long enough to get inflation back to the 2% target. We expect inflation to fall further this year and continue to fall towards our 2% target next year. That means prices will be rising more slowly than they have been. post: BoE's latest f'casts pic.twitter.com/y6lNay7Y34
U.S.-based employers announced 36,836 cuts in October, a 22% decrease from the 47,457 cuts announced one month prior. It is 9% higher than the 33,843 cuts announced in the same ...
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Nonfarm business sector labor productivity increased 4.7 percent in the third quarter of 2023, the U.S. Bureau of Labor Statistics reported today, as output increased 5.9 percent ...
Our Monetary Policy Committee (MPC) decides what monetary policy action to take. The MPC sets and announces policy eight times a year (roughly once every six weeks). In this ...
post: *BOE'S BAILEY: WATCHING TO SEE IF FURTHER RATE HIKES NEEDED *BOE'S BAILEY: MUCH TOO EARLY TO CONSIDER RATE CUTS post: *BOE'S BAILEY: EXPECT INFLATION TO FALL THIS YEAR AND NEXT *BOE'S BAILEY: `NO ROOM FOR COMPLACENCY' ON INFLATION post: BOE GOV. BAILEY: WE WILL KEEP INTEREST RATES HIGH ENOUGH FOR LONG ENOUGH TO RETURN INFLATION TO TARGET. post: BoE’s Bailey: Expect `Larger' Step Down In Inflation In October - See Inflation Just Below 5% In October post: BOE GOV. BAILEY: TERE ARE UPSIDE RISKS TO INFLATION FROM THE MIDEAST CONFLICT.
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- Posted: Nov 2, 2023 8:12am
- Submitted by:Category: Fundamental AnalysisComments: 0 / Views: 2,744