households and businesses are in a safer position than they were before the financial crisis, with a lower proportion of household income spent on mortgage payments and a lower proportion of business spend used to service debt. In its Financial Stability Report, the central bank noted that U.K.
The Bank of England on Wednesday said British banks are strong enough to support households and businesses through the squeeze of higher borrowing costs and the rising cost of living.
"But for today, the bulls have the wind at their back, and certainly, the Fed could take the position that just keeping rates at current levels will push inflation lower," he added. "Ultimately, the Federal Reserve will have to decide whether an inflation rate under 3% is good enough." "Ultimately, given a chronic shortage of labor, lack of immigrants and a lot of Inflation Reduction Act money to stimulate new factories and Capex projects, we are skeptical that inflation can really go back to 2%," Williams said. While he said the central bank will likely raise rates at its July meeting, the question is now if the Fed will continue to raise rates after, which could in turn mean "the soft landing turns into something harder." His focus now? If the Fed can be content with an annual inflation rate between 2% and 3%. "The bulls get their wish," he said in reaction to the June reading. That's because it can signal to the Federal Reserve that past interest rate hikes are cooling the economy enough The consumer price index showing lower inflation growth than analysts anticipated in June can bolster the hopes of investors anticipating the market could move higher, according to Rhys Williams, chief strategist at Spouting Rock Asset Management. Meanwhile, the odds that the Fed will have reversed this month's rate increase by yearend have risen to 14.9% from 10.2% yesterday and 12.6% last week. 13, odds that rates will be a half point higher than today's 5.00%-5.25%, have slumped to 20.8% now from 32.4% on Tuesday and 28% one week back. 1 meeting are now 26.5% compared with 36.2% yesterday and 31.6% one week ago.īy the time of the Fed's last policy meeting of the year, on Dec. Odds that fed funds will stand a half point higher by the end of the Fed's Nov. The chance that the Fed will go another quarter point at its September meeting (it skips August), has fallen to 13.3%, down from 22.3% on Tuesday and 18.1% a week ago. The odds that the Federal Reserve will raise rates again, after its next meeting on July 26, have faded on the back of Wednesday's weaker-than-expected consumer price report for June.Īccording to the CME FedWatch tool, interest rate traders still see a 95% certainty that the central bank lifts its benchmark fed funds rates a quarter point, to 5.25%-5.50%, on July 26. A previous version misstated the estimate. The market is pricing in an approximately 92% chance the Fed raises interest rates at the July meeting, according to CME's FedWatch Tool.Ĭorrection: Economists polled by Dow Jones expected CPI to rise 3.1% last month. June data for the producer price index - another well-watched gauge of inflation - is due Thursday before the bell.īoth price indexes are being watched for tea leaves on the path of inflation, which investors see as potential harbingers for how the central bank will move interest rates going forward. All three of those things, while they are moderating, are still uncomfortably high," Horneman added. "There's still three areas of the inflation that the Fed's looking at very closely - service inflation, wage inflation and housing inflation. But I don't think we're ready to say that they're going to be able to cut rates," said Megan Horneman, chief investment officer at Verdence Capital Advisors. Inflation is going the way that the Federal Reserve wants it to go.
On top of that, core CPI - which strips out volatile food and energy prices - rose less than expected. Month over month, the index rose 0.2% last month, also less than forecast. Economists polled by Dow Jones expected a 3.1% increase. The consumer price index rose 3% on a year-over-year in June. Regional banks also saw gains, with Comerica adding 3.1%, and Zions Bancorporation jumping 2.8%. Citigroup and Goldman Sachs saw shares climb 1.8% and 1.7%, respectively. Personal Loans for 670 Credit Score or Lowerīank stocks jumped on Wednesday. Personal Loans for 580 Credit Score or Lower Best Debt Consolidation Loans for Bad Credit
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