Latest news with #USFederalReserve
Mint
22 minutes ago
- Business
- Mint
Equally at sea: The US Federal Reserve has no more clarity than we do
The most powerful institution in global finance is as completely and utterly confused as the rest of us. At its monetary policy decision on Wednesday, the US Federal Reserve's rate-setting committee held rates at 4.25%-4.5%, but Chair Jerome Powell and his colleagues essentially acknowledged that they had no idea what would come next. They couldn't precisely project where US President Donald Trump's tariff rates would end up, much less how they would impact consumer inflation and the labour market. Nor could they confidently handicap jarring changes to immigration and fiscal policies and the evolving war between Israel and Iran. The big risk, of course, is that the uncertainty and indecision will make the Fed late to arrest a potential increase in unemployment. Also Read: The US-China trade truce doesn't solve the Fed's headache In the Summary of Economic Projections, the median member of the Federal Open Market Committee pencilled in two rate cuts this year. But that 'base case' constitutes a massive oversimplification of the outlook, and some investors may be underestimating just how fat the tails are in the distribution of potential outcomes, even over just the next three or four months. Of the 19 respondents, 14 policymakers thought the risks to their inflation forecasts were weighted to the upside—the same number that thought as much about the risks to their unemployment projections. In a nutshell, they don't pretend to know what's coming, but Chair Powell thinks we may find out relatively soon. Here's Powell at his post-decision press conference (emphasis mine): 'We feel like we're going to learn a great deal more over the summer on tariffs. We hadn't expected them to show up much by now, and they haven't. And we will see the extent to which they do over the coming months. And I think that's going to inform our thinking for one thing. In addition, we'll see how the labour market progresses." Also Read: The Fed's 'Mission Impossible' is now 'Mission Accomplished' Given all of the uncertainty, Powell is right to stay in wait-and-see mode, but he can't linger there too long once the data breaks. Meanwhile, those of us on the sidelines should prepare for the policy outlook to shift quite quickly, potentially as soon as the Fed's 16-17 September meeting. Maybe we really will get two rate cuts this year, but it's also perfectly plausible that we'll get 150 basis points worth—or none. It's a great environment for high-stakes gamblers—but not so much for American households. As Powell alluded to, it's largely trade policy that has put us all in this bind. In recent months, the disinflationary trends in housing and non-housing services have the core personal consumption expenditures deflator—the Fed's preferred inflation gauge—up around 2.6% in May from a year earlier (this is based on a Bloomberg Economics estimate from the consumer and producer price data). That's not at all terrible, and it would probably be poised to converge on the Fed's 2% target if not for Trump's extremely ill-timed and pointless trade wars. Without tariffs, the Fed would probably be cutting right now, providing ballast to a wobbly labour market and a housing market that's already seeing year-over-year price drops in some parts of the country. Unfortunately, the central bank has to play the hand it's dealt. In the immediate term, we still don't know if companies will pass on higher prices to consumers, accept narrower margins or manage their way to stable prices by laying off parts of their workforce—and maybe it will be a combination of all three. Also Read: Barry Eichengreen: Is the US Federal Reserve's independence at threat? The risks to both the Fed's stable prices and maximum employment mandates are substantial, and that's causing paralysis among policymakers—a weird 'calm before the storm" effect both at the Fed and in financial markets. But at some point before autumn, we are very likely to see something shatter that calm. An alarming jump in initial jobless claims could lead to rate cuts above and beyond any policymaker's base case. A jarring CPI report or two could keep the Fed on hold for longer and prompt a selloff in bonds. And a jump in realized inflation coupled with signs of unanchored inflation expectations could even put hikes back on the table. If they're late to mitigate the damage, Fed policymakers can take cover in blaming Trump's self-sabotaging trade policy. But they must prepare to act immediately and convincingly once the signals break in a particular direction. ©Bloomberg The author is a columnist focused on US markets and economics.
Khaleej Times
2 hours ago
- Business
- Khaleej Times
Dubai: Gold prices drop further, losing over Dh9 per gram so far this week
Gold prices continued their downward trajectory, losing nearly another Dh2 per gram on Friday. The 24K variant of the precious metal was trading at Dh404.25 per gram on Friday, losing over Dh9 per gram this week so far. Among the other variants, 22K, 21K and 18K were selling at Dh374.25, Dh359.0 and Dh307.5 per gram, respectively. Spot gold was trading at $3,352.38 per ounce, down 0.63 per cent as investors expect fewer interest rate cuts by the US Federal Reserve. Michael Brown, senior research strategist at Pepperstone, said the yellow metal has traded in perhaps surprisingly sanguine fashion over the last week or so, with tight ranges having persisted despite geopolitical tensions in the Middle East continuing to ratchet higher. 'Bullion's brief foray north of $3,400 last Friday pared rapidly, as markets quickly discounted the initial Israel-Iran kinetic exchanges, though some degree of haven demand continues to linger, particularly as the possibility of US involvement in the ongoing conflict mounts. This demand has kept gold underpinned, even if the impulsive move higher seen at the back end of last week has subsequently fizzled out,' he said Brown hoped that the longer-run bull case for gold remains a solid one, as reserve asset allocators continue to diversify away from the US dollar, a process which has been underway for the last three years at least, and which has accelerated since US President Donald Trump's inauguration.
Business Standard
2 hours ago
- Business
- Business Standard
Dollar index sees mild pull back but heads for weekly gain
The dollar index pulled back on Friday even as persistent geo-political tensions in Middle East limited sharp downside in the safe haven currency. As per latest report, the White House says US President Donald Trump will make a decision on whether the US will join in the Israel-Iran conflict in the next two weeks. Meanwhile, US Federal Reserve (Fed) yesterday announced to leave the interest rate unchanged at 4.5% in June but still sees around 50 basis points of interest rate cuts through the end of 2025, weighing on the greenback. Moreover, President Donald Trump on Thursday reportedly targeted Federal Reserve Chair Jerome Powell, calling for a massive 2.5-point reduction in interest rates. Investors now await the Fed's Monetary Policy Report, scheduled for release on Friday. The Federal Reserve Board will submit reports to Congress containing discussions of "the conduct of monetary policy and economic developments and prospects for the future." The dollar index that measures the greenback against a basket of currencies is quoting at 98.18, down 0.31% on the day and is set for weekly gain of around 0.50%.
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Business Standard
3 hours ago
- Business
- Business Standard
Bitcoin slips to monthly low as Israel-Iran conflict spooks investors
Bitcoin price today, Friday, June 20, 2025: The ongoing geopolitical conflict in the Middle East between Israel and Iran, compounded by the US Federal Reserve's decision to hold interest rates, has pushed the flagship cryptocurrency Bitcoin to its lowest level this month, touching $103,940. Bitcoin, analysts said, is in a phase of consolidation due to global macroeconomic uncertainty. Bitcoin was trading at around $104,714.58, down 0.20 per cent, with a 24-hour volume of $36.34 billion, as of 11:40 AM on Friday, according to data from CoinMarketCap. The bellwether cryptocurrency recorded a 24-hour low of $103,940.78 and a high of $105,104.40. Bitcoin is currently 6.79 per cent lower than its peak of $111,970.17, scaled on 22 May this year. Bitcoin faces restistance at $106,200 levels Bitcoin, Edul Patel, Co-founder and CEO of Mudrex, said, remains in a consolidated range due to global macroeconomic uncertainty. Geopolitical tensions in the Middle East, combined with the US Federal Reserve's decision to hold interest rates, Patel believes, have led to a risk-averse stance in the market. "Despite holding above the critical $100,000 level for over 40 days, Bitcoin continues to see muted trading activity, showing limited buying pressure. Bitcoin hasn't acquired enough strength to make a strong move," said Patel. For Bitcoin, Patel sees immediate support at $102,400, while key resistance is forming near $106,200. Meanwhile, Himanshu Maradiya, Founder & Chairman of CIFDAQ, believes that the consolidation in the crypto market is due to microeconomic pressure. "The Fed's unchanged rates and lowered growth projections have investors cautious. Still, signs of structural adoption are strong. Coinbase and Circle stocks are soaring, driven by rising stablecoin and blockchain demand," said Maradiya. "Public companies are diversifying into Hyperliquid, and Eigencloud's a16z-backed launch signals the growing power of restaking and modular crypto infrastructure." Ethereum and other altcoins trade lower Meanwhile, Ethereum (ETH), the world's second-largest cryptocurrency by market capitalisation, was also following a similar trajectory. At last check, it was quoted trading at $2,507.62, down 0.76 per cent. Ethereum has fluctuated in the range of $2,486.10 to $2,544.83 in the last 24 hours. Among other popular cryptocurrencies, Hyperliquid (HYPE) was trading lower by 6.67 per cent, Ripple (XRP) by 2.67 per cent, Solana (SOL) was down 2.6 per cent, Cardano (ADA) was trading lower by 2.59 per cent, and Binance Coin (BNB) was trading lower by 0.46 per cent.
Time of India
4 hours ago
- Business
- Time of India
Oil, war and tariffs tear up markets' central bank roadmap
Investor unease about an increasingly uncertain environment is rising, as Norway's shock rate cut on Thursday highlights how US tariffs, Middle East conflict and a shaky dollar make global monetary policy and inflation even harder to predict. Norway's crown slid roughly 1 per cent against the dollar and the euro in a sign of how unexpected the move was. And Switzerland, which cut borrowing costs to 0 per cent on Thursday, confounded some expectations among traders for a return to negative rates in the deflation-hit nation, as its central bank warned of a cloudy global outlook. Just a day earlier the US Federal Reserve kept rates on hold and chair Jerome Powell said "no one" had conviction on the rate path ahead. The conclusion for markets: monetary policy uncertainty is one more headwind to navigate against a backdrop of geopolitical and trade risks. Global stocks pulled away from recent peaks, a gauge of expected volatility in European equities touched a two-month high as stocks across the region fell and government bonds, usually geopolitical risk havens, sold off. "We're at a moment of considerable policy and macro uncertainty," said BlueBay chief investment officer at RBC Global Asset Management Mark Dowding. "We can't see a clear trend on interest rates," he added, which meant he was holding back from active market bets across the group's investment portfolios. Volatility was set to rise, some investors said, because a choppy dollar and oil prices whipped around by geopolitics meant that central banks were far less able to provide markets and investors a clear route map for the future. "You cannot just take your cues from the central banks anymore as they are facing a harder job of reading the economy themselves," T.S. Lombard director of European and global macro Davide Oneglia said. Broken models Rate-cutting European central banks are not just diverging from the Fed, which is grappling with the inflationary risks of President Donald Trump's tariffs. They are also struggling to navigate a new era where the dollar, the lynchpin of world trade, commodity prices and asset valuations, has turned weaker and more volatile under trade war stress and government debt anxiety. "That's a massive, massive fundamental shift in global markets that everyone is trying to assess," Monex Europe head of Macro Research Nick Rees said. "All of those standard economic rules of thumb we use for forecasting are completely broken right now." The dollar is down almost 9 per cent against other major currencies this year but has risen following the outbreak of a war between Israel and Iran. European Central Bank policymaker Francois Villeroy de Galhau said on Thursday the ECB might have to adapt its rate cut plans if oil price volatility was long-lasting. The new status quo in markets could well be an era of central bank surprises that create rapid shifts in the market narrative, asset pricing and volatility trends, analysts said. "We're getting into this next cycle in which variables are much more volatile, because, rather than (monetary policy) being just easily predictable, events just take over and policy and human factors, as we now know with Donald Trump, play an important role," Oneglia said. Norway's surprise cut came because the crown was a "runaway top currency" of the trade-war era, added Societe Generale's head of FX strategy Kit Juckes. With investors chasing around the world to identify stores of wealth that are not US dollars, meanwhile, the Swiss franc has soared, cutting the costs of imports and pushing the economy into deflation. On Thursday, the franc rose against the dollar as traders saw the SNB's cut as too small to keep deflation at bay. Ninety One multi-asset head John Stopford said the hazard risk was rising for global stocks and that options products that aim to offer protection from incoming volatility looked fairly cheap. He was buying bonds issued in nations where inflation and rates could come down materially, such as New Zealand, but was negative on longer-dated US Treasuries and German Bunds where economic uncertainty was higher and government borrowing was likely to rise. Global stocks remain almost 20 per cent above their April trough, after investors relaxed about tariffs. Stopford said there was more to worry about in the short term. "The stock market feels like it's a thatched house in a hot country with a fire hazard risk, and people aren't charging much to insure the house," Stopford added.
