Latest news with #FOMC
Yahoo
13 hours ago
- Business
- Yahoo
Dollar Rebounds on Hawkish Powell
The dollar index (DXY00) Wednesday recovered from early losses and rose by +0.09%. The dollar moved higher Wednesday afternoon due to hawkish comments from Fed Chair Powell, who said, 'We expect a meaningful amount of inflation in the coming months.' Mr. Powell's comments signal the Fed is not close to cutting interest rates and is supportive of the dollar. Also, heightened geopolitical risks in the Middle East support safe-haven demand for the dollar. The dollar on Wednesday initially moved lower on the weaker-than-expected reports on US May housing starts and building permits. Also, the action by the FOMC to cut its US 2025 GDP forecast was bearish for the dollar. In addition, the FOMC's dot-plot that projects two 25 bp interest rate cuts by the end of the year is negative for the dollar. A Look Ahead at the Fed Dollar Rebounds on Hawkish Powell Dollar Slips Ahead of FOMC Meeting Results Our exclusive Barchart Brief newsletter is your FREE midday guide to what's moving stocks, sectors, and investor sentiment - delivered right when you need the info most. Subscribe today! US weekly initial unemployment claims fell -5,000 to 245,000, right on expectations. US May housing starts fell -9.8% m/m to a 5-year low of 1.256 million, weaker than expectations of 1.350 million. May building permits, a proxy for future construction, unexpectedly fell -2.0% m/m to a 4-3/4 year low of 1.393 million, weaker than expectations of no change at 1.422 million. As expected, the FOMC kept the fed funds target rate unchanged at 4.25%-4.50% and said the uncertainty about the economic outlook has 'diminished but remains elevated.' The statement removed the language that the committee 'judges that the risks of higher unemployment and higher inflation have risen.' The FOMC cut its US 2025 GDP estimate to 1.4% from 1.7% in March and raised its 2025 core inflation estimate to 3.1% from 2.8% in March. The Fed's dot plot of interest rate projections shows the median fed funds rate forecast at the end of 2025 at 3.875%, implying two quarter-point cuts this year, the same as they expected in March. Fed Chair Powell said, 'We expect a meaningful amount of inflation in the coming months' as the increases in tariffs are likely to boost prices and that their effects on inflation could be more persistent. The markets are discounting the chances at 10% for a -25 bp rate cut after the July 29-30 FOMC meeting. EUR/USD (^EURUSD) Wednesday fell by -0.04%. The euro on Wednesday gave up an early advance and finished slightly lower due to a rebound in the dollar. The euro was also under pressure Wednesday due to dovish comments from ECB Governing Council member Panetta, who stated that the Eurozone's economic prospects face 'substantial' risks due to US tariffs and the ongoing conflict in the Middle East. Swaps are discounting the chances at 7% for a -25 bp rate cut by the ECB at the July 24 policy meeting. USD/JPY (^USDJPY) Wednesday fell by -0.09%. The yen posted modest gains on Wednesday as heightened geopolitical risks in the Middle East have prompted safe-haven buying of the yen. Wednesday's report showing a smaller-than-expected decline in Japan's Apr core machine orders was also supportive of the yen. The yen fell back from its best level when T-note yields rose on hawkish comments from Fed Chair Powell. Japan Apr core machine orders fell -9.1% m/m, a smaller decline than expectations of -9.5% m/m. Japanese trade news was mixed as Japan's May exports fell -1.7% y/y, a smaller decline than expectations of -3.7% y/y. However, May imports fell -7.7% y/y, weaker than expectations of -5.9% y/y and the biggest decline in 16 months. August gold (GCQ25) Wednesday closed up +1.20 (+0.04%), and July silver (SIN25) closed down -0.238 (-0.64%). Precious metals on Wednesday settled mixed. Heightened geopolitical risks in the Middle East support safe-haven demand for precious metals as the war between Israel and Iran continues for a sixth day with no end in sight. In addition, global trade uncertainty is boosting safe-haven demand for precious metals after President Trump indicated last Wednesday that he is moving ahead with his reciprocal tariffs. Fund buying of silver continues to support prices as silver holdings in ETFs rose to a 2-1/4 year high Tuesday. Wednesday's recovery in the dollar from early losses to higher on the day undercut precious metals prices. Also, gold prices fell more than -$10 an ounce in after-hours trading Wednesday afternoon due to hawkish comments from Fed Chair Powell, who said, 'We expect a meaningful amount of inflation in the coming months' due to tariffs. Silver prices also fell back after the FOMC cut its US 2025 GDP forecast and following Wednesday's weaker-than-expected reports on US May housing starts and building permits, which showed weakness in industrial metals demand. On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Sign in to access your portfolio
Yahoo
13 hours ago
- Automotive
- Yahoo
Car interest rates are going up as the Fed quells inflation
The Federal Reserve doesn't directly set auto loan rates — but it does affect the cost for lenders to borrow money. The Federal Funds rate was cut three times in 2024 but has not seen any changes in 2025, so it currently sits at 4.25-4.5 percent. High interest rates have offset any concrete wins from stabilizing vehicle prices. Inflation and its impacts are likely not going away anytime soon. That means high car loan interest rates will likely linger, too. While the Federal Open Market Committee (FOMC) announced the third federal funds rate cut in December 2024, rates remain unusually high, which tends to drive higher rates on consumer loan products. With no cut announced after the FOMC meeting in June, rates will likely remain high over the coming months. Unfortunately, this does mean that car loan interest rates are also high, though they have been on the decline. If you plan on buying a car soon, carefully compare rates with multiple lenders — and if possible, wait and see if rates continue to fall over the coming months before you buy. Choices by the Federal Reserve affect the benchmark rate, which has a domino effect on the cost of vehicle financing. Although rates depend on several factors — including a borrower's credit history, term length, vehicle type and more — increased inflation means even drivers with perfect credit face higher rates. 'One of the Fed's core duties is to keep purchasing power in check, and they do it by raising interest rates,' explains Sarah Foster, senior U.S. economy reporter at Bankrate. To achieve this goal, the FOMC increased rates 11 times since March 2022. In September 2024, the FOMC finally began cutting its target rate — and it is now sits at 4.25-4.5 percent. However, this is still higher than the historic norm, and the FOMC once again did not choose to cut rates after the June 2025 meeting. According to Foster, high interest rates make it more expensive to borrow money. And that, combined with high costs, has been like a one-two punch to Americans' finances. She explains that this has left many drivers 'resigned to finance an exceptionally expensive big-ticket purchase at an uncomfortably high rate.' Higher interest rates are just one result of the Feds' goal to quell inflation. 'Higher borrowing costs don't just disincentivize spending but squeeze people out of being able to afford big-ticket items, causing the economy to slow,' Foster says. Bankrate experts believe the Fed will continue cutting rates through 2025. However, rates on auto loans are unlikely to significantly drop after this initial cut. The increases can be attributed to the higher benchmark rate and more expensive vehicles. Stay up to date with changing news and how it affects your finances with Bankrate's Federal reserve hub. While the interest rate you receive depends on many factors, including uncontrollable ones like inflation, you can still make moves to save money regardless of rate hikes made by the Fed. Most lenders will have higher rates right now, but that doesn't negate the benefit of shopping around. Compare rates and terms from at least three lenders to decide which quote is best for your needs. Pay close attention to the available APR along with the repayment term. As vehicle prices hit record highs, focusing on your budget when shopping is vital. With little wiggle room, it is best to calculate how much you can afford before heading to the dealership. This way, you will understand how much you need to borrow to drive your new car. Bankrate tip Be sure to shop the total loan amount, not just the monthly payment. While taking out a longer-term loan for cheaper monthly costs can be enticing, it can be more expensive in the long run. You are able to apply for prequalification or preapproval with most lenders, which will give you a firm idea of what your expected rates will be. It can also help during negotiations at the dealership — with a loan already in place, you know exactly what you can afford to spend and potentially negotiate for lower rates through dealership financing. Not all lenders offer this step, so look for it when comparing options. The upfront cost of an EV tends to be higher, but electric vehicles — and hybrids — do have added benefits beyond the gas pump. Although both auto loan rates and vehicle prices are high right now, you have ways to cut down on costs. By applying for a green auto loan and applying for EV tax credits, you can make back any money lost due to higher interest rates. And if you don't need your vehicle to be fully electric, a hybrid is often a more budget-friendly option that can help you save at the pump. It may seem counterintuitive because used cars typically have higher rates, but buying a used car can save you money if you choose a car with a lower price tag. It can also help you save money every month. According to data from Experian, the average payment for a used car was $523 in the third quarter of 2024. Compared to the average new payment of $735, even a slightly higher interest rate on a used car still saves money. One of the most effective times to consider refinancing your auto loan is when rates have lowered and your credit score has improved. The process is similar to applying for your initial loan, though there are a few extra steps on the back end. Evaluate your current loan. Before beginning your refinancing process, it is important to look at your current loan's term and interest rates. Use an auto refinance calculator to understand potential monthly savings once you have those numbers in mind. Check your credit. By understanding your credit score, you can determine your eligibility for good rates. When it comes to refinancing — just like with any loan — the better your credit, the more competitive your rates will be. Shop around. Comparing refinancing rates with at least three different lenders is the key to getting a good deal. Just like your initial car loan, calculating potential costs and working them into your budget will help you avoid spending more than you need to. Receive new terms. If you are approved, your new lender will typically send your payoff amount to your current lender. Follow up with both lenders to make sure everything is completed on time and accurately. Although many do not have the luxury of waiting to buy a car, patience may be on your side when it comes to saving money. Interest rates will continue to make borrowing money for your vehicle more expensive. So whether you plan to wait out the high rates or head to a dealership, prepare for higher prices to finance your vehicle. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Free Malaysia Today
14 hours ago
- Business
- Free Malaysia Today
Ringgit ends lower amid global financial concerns
KUALA LUMPUR : The ringgit continued to end lower against the greenback today, weighed down by emerging concerns over the global financial outlook, a dealer said. Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid said the ringgit depreciated to as low as RM4.2633 during the morning session as the US federal open market committee (FOMC) members were reluctant to cut rates excessively in light of concerns over higher inflation risk in the second half of 2025. 'This was reflected in their latest quarterly forecast of personal consumption expenditures price index (PCE) inflation, which is expected to reach 3% for 2025 versus the actual figure of 2.1% in April 2025,' he told Bernama. He added that sentiments will remain guarded as the market participants are wary of the potential escalation of the Israel-Iran conflict. At 6pm, the local currency slid to 4.2590/4.2625 versus the US dollar from yesterday's close of 4.2500/4.2550. Conversely, the ringgit traded higher against a basket of major currencies at the close. It rose against the British pound to 5.7164/5.7211 from 5.7218/5.7285 at the close yesterday, gained vis-à-vis the euro to 4.8868/4.8908 from 4.8888/4.8945 yesterday and appreciated versus the Japanese yen to 2.9286/2.9312 from 2.9322/2.9359 previously. The ringgit was also higher against its Asean peers. It advanced versus the Indonesian rupiah to 259.5/259.9 from 260.5/260.9 yesterday, strengthened against the Singapore dollar to 3.3072/3.3102 from 3.3074/3.3115 yesterday, and was up vis-à-vis the Thai baht to 12.9966/13.0513 from 13.0240/13.0449 previously. The local unit also rose against the Philippine peso to 7.41/7.42 from 7.46/7.48 at yesterday's close.
Yahoo
20 hours ago
- Business
- Yahoo
War, tariffs, and Trump: What members of the FOMC will be thinking as they finalize their base rate decision today
ANALYSIS: The Federal Reserve is widely expected to keep interest rates steady at 4.25% to 4.5% amid heightened uncertainty from Middle East tensions, volatile oil prices, tariff disputes, and a recent U.S. debt downgrade by Moody's, all of which complicate the economic outlook and policy decisions. Despite political pressure from President Trump to cut rates, analysts anticipate the Fed will maintain its cautious, data-driven approach, holding off on cuts until there is clearer evidence of economic weakness or easing inflation. If members of the Federal Open Market Committee (FOMC) were hoping to meet with some greater clarity this month, they will be sorely disappointed. Instead of a clearer path laid out ahead, Jerome Powell and his peers sat down to news of increased geopolitical conflict in the Middle East—potentially pushing up oil prices—as well as ongoing uncertainty over tariff agreements with key partners, and a downgrade of U.S. credit by Moody's. Of course, the elephant in the room will be President Donald Trump's reaction if the FOMC once again refuses to heed his wishes in cutting the base rate. The melting pot of issues leads most analysts to suspect the base rate will once again be held steady at 4.25 to 4.5%—a relatively tight stance according to dovish economists who argue the economy is coping relatively well according to data. As David Doyle, head of economics at Macquarie Group, wrote in a note shared with Fortune this week, the Fed is walking a 'tightrope.' 'The FOMC is likely to hold rates steady again this week,' Doyle continued. 'The market reaction is likely to be driven by the communication and the potential guidance of further cuts. The dot plot may push out the suggested timing of rate cuts. We suspect this may tilt somewhat and suggest 25 bps [basis points] of cuts in 2025 and 75 bps in 2026 (from 50 bps in each year in March).' Doyle added that Chair Powell 'may describe recent inflation developments as encouraging, but also downplay their relevance given uncertainty ahead due to tariffs, fiscal policy, and the recent spike in the oil price due to geopolitical developments.' The overall expectation from Wall Street is that there will be no change in the base rate, but here are some of the headline factors which may be influencing Chair Powell's final decision to be announced later today. Tensions in the Middle East are escalating by the day after Israel and Iran launched attacks on each other, with both sides targeting senior military officials. Despite saying the U.S. wouldn't wade into the conflict, President Trump posted on his social media site, Truth Social, yesterday that 'we now have complete and total control of the skies over Iran,' and suggested Iran's leader, Ayatollah Ali Khamenei, is an easy target despite being in hiding. Khamenei wouldn't be 'taken out … for now,' Trump added. The escalating tensions in the Middle East pose a question over oil supply, with Iran threatening to close the Strait of Hormuz. The oil flow through the strait accounts for about 20% of global petroleum liquids consumption, writes the U.S. Energy Information Administration. Vikas Dwivedi, global energy strategist at Macquarie, wrote in a note seen by Fortune: 'We expect oil prices to remain volatile with an upward trend for the next few weeks as both Iran and Israel maintain their military intensity. Regardless of military or diplomatic progress, we expect Brent to rally towards the low $80 level before hitting a plateau as the perceived risk of actual oil supply disruption becomes largely discounted. 'From the low $80 plateau, the next price move will, in our view, be driven by what happens to Iranian oil export infrastructure. If it is damaged or destroyed, we believe oil will trend towards $100 due to the direct loss of Iranian exports and the risk premium associated with Iran's response, including the blockage of the Strait of Hormuz. 'There will likely be selloffs on hopes for diplomatic solutions, profit-taking, and new shorts, but we expect those to be bought until the market ascertains the risk to oil supply.' None of this makes Powell's life any easier, as oil is a key factor determining the rate of inflation in the U.S. Policy out of the White House is also adding further uncertainty to the already blurry picture. Trump's 'Big, Beautiful Bill' has raised eyebrows about the amount it could contribute to U.S. national debt, despite some deficits being offset by inflationary but moneymaking tariff policies. The lack of action from the Oval Office isn't impressing Moody's, which downgraded U.S. debt a month ago to Aa1 from Aaa. That's an issue for Powell, with the move pushing Treasury yields up, creating higher borrowing costs for the government that potentially have trickle-down inflationary impacts on consumers. But as Deutsche Bank's Jim Reid wrote in a note shared with Fortune this morning: 'Ahead of the Fed's decision, U.S. Treasuries rallied yesterday, on flight to quality, and as the weak data cemented the view that rate cuts were still likely in the months ahead. 'That meant yields fell across the curve, with the two-year yield (–1.5 bps) down to 3.95%, whilst the 10-year yield (–5.7 bps) fell to 4.39%. The outperformance of long-end bonds came after news that the Fed will be holding a meeting on June 25 to discuss changes to the supplementary leverage ratio, which may allow banks to hold more Treasuries.' Another question is, of course, tariffs, with Powell already signaling he is waiting to see if businesses pass on increased costs to consumers. Thierry Wizman, global FX and rates strategist at Macquarie, pointed out that level inflation data after the 'Liberation Day' tariff announcements wasn't a signal to bank on, writing the 'low May CPI [consumer price index] print isn't because tariffs don't matter for measured inflation. Tariffs do matter, or will matter. 'Rather, inflation retreated because underlying notional demand has weakened … We still lean toward the view that Jay Powell will sound more 'dovish' next week than he did in May. We believe that were it not for the uncertainty caused by the tariffs, the combined information coming from the inflation and labor-market data would have compelled the Fed to have resumed cutting its policy rate by now.' Powell also has to weather the storm that may come in the form of President Trump, who has made it clear that he wants the Fed to cut rates. While Trump has stepped back from threats that made the market worry that the Fed's independence might be under threat, he has made no secret of the fact he wants 'too-late Powell' to cut the base rate. Powell, on the other hand, has maintained that politics have absolutely no impact on the Fed's decision-making. Despite threats from Trump that he may threaten Powell over the lack of action, Richard Clarida, the former Federal Reserve vice chair from 2018 to 2022, said the White House will stop short of materially altering the central bank's independence. 'We may be going to a world where the Fed loses some power in the regulatory sense,' Clarida told MarketWatch in an interview published yesterday. 'But it looks like the Fed retains independence to raise or lower interest rates.' On the chairman to follow Powell, Clarida added, Trump's nomination will not be the only factor: 'I think markets can have a say,' he explained, highlighting stocks and bonds would be in for a shaky ride if the candidate for Fed chairman wasn't viewed as truly independent or committed to bringing inflation down. This story was originally featured on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Economic Times
a day ago
- Business
- Economic Times
Peter Schiff sounds alarm: America faces economic doom as Fed powerless against hyperinflation threat
Peter Schiff Sounds the Alarm on the US Economy Fed Leaves Rates Unchanged Again Inflation and Weak Economy Ahead? Live Events Peter Schiff Predicts Higher Inflation and a Sluggish Economy FAQs (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel Economist Peter Schiff has issued a stark warning about the US economy and criticised the Federal Reserve's decision to keep its benchmark federal funds rate unchanged at a current range of 4.25% to 4.5%, as per a Fox Business' "The Claman Countdown", Schiff told host Liz Claman that the "biggest takeaway is that Powell basically admitted that they have no idea what's going to happen," quoted Fox Business. He said, "They don't really know what's going to happen to consumer prices. They don't know what's going to happen to employment," and added, "I don't even think their forecasts are educated guesses so much as wishful thinking," as quoted in the READ: Trump's big headache? U.S faces mounting risk to 40,000 troops in Middle East as Iran threatens response His remark came after the Federal Open Markets Committee (FOMC) kept the central bank's benchmark interest rate at its current level and also released a summary of economic projections, which is also known as the "dot plot," reported Fox Business. This showed that the members expect two Fed interest rate cuts in 2025, followed by one cut each in 2026 and 2027, as per the FOMC also forecasted that PCE inflation will increase to 3% this year and then fall to 2.4% in 2026 and 2.1% in the following year, as per Fox Business reported. While the real GDP is projected to contract to 1.4% in 2025 before growth picks up to 1.6% in 2026 and 1.8% in 2027, according to the report. FOMC also expected that unemployment would increase to 4.5% in 2025 and 2026, before falling to 4.4% in 2027, as per the who is the chief economist at Euro Pacific Asset Management, said that he thought inflation will be "a lot higher" than the Fed expects and that the US economy will be "a lot weaker," as quoted by Fox Business. He also said that the "big problem" for inflation is "all of the inflation chickens that the Fed has been releasing for more than a decade are coming home to roost," as quoted by Fox went on to predict that the United States will experience stagflation "with a recession and much higher inflation happening at the same time, really complicating the defense ability to try to do something about either problem," as quoted in the report. The economist also warned that America is on the path to "runaway inflation" that could become " hyperinflation ," quoted Fox explained that lower interest rates will not help the US economy, and even said that it was the "cause," as per the suggested that, "The solution involves much higher interest rates," adding, "Now, I understand that's going to be very painful, given the economy that we've created, built on a foundation of cheap money," quoted Fox economist pointed out that "It means stock prices come down, real estate prices go down, companies fail," adding, "There's going to be bankruptcies. There is going to be defaults. There's going to be a protracted recession, probably a much worse financial crisis than 2008, but all that has to happen because the alternative to that is even worse," as quoted in the criticised the Fed for keeping interest rates unchanged and said they are relying on "wishful thinking," as per Fox Business expects inflation to be much higher than the Fed is forecasting.
