Bank of England ready to raise interest rate at December meeting

The US stock market closed yesterday with a slight increase. The Dow Jones index increased by 0.29%, the S&P 500 index added 0.09%, and the Nasdaq Composite index added 0.07%. The Dow Jones and S&P 500 indices once again rewrote the historical highs.

According to FOMC officials, the US central bank is actively monitoring inflation indicators and is ready to act decisively if consumer prices continue to rise. But Fed officials are confident that inflation remains under control and interest rates should not be expected to rise until the end of the QE program reduction.

Main from Fed member Harker: "If inflation doesn't cool, the Fed may have to accelerate rate hikes; I expect inflation to moderate next year as supply chains reopen and problems go away; the federal funds rate will rise before the Fed's bond-buying cuts are completed."

Main from Fed member Evans: "We need to reduce inflation by about 2%; it is difficult to predict how long it will take for supply and demand conditions to normalize and bring inflation down; the Fed is on track to complete the asset purchase reduction by mid-2022; it is unknown how long it will take for inflation to come down."

The main from Fed member Bowman: "Predicting inflation caused by supply chain disruptions and labor market weakness is the Fed's biggest problem; the problem with higher inflation has a stronger impact on low- and middle-income people."

Alphabet's capitalization jumped to $2 trillion. Google's parent company has the best performance among the "big tech" companies this year, and it's rising by 70%.

Yesterday, the main European stock indexes closed in different directions. The British FTSE 100 and German DAX lost 0.05%, Italian FTSE MIB decreased by 0.3%, and Spanish IBEX fell by 0.65%. Meanwhile, France's CAC 40 index added 0.1%. The rise in energy prices in Germany reached a 20-year high. The ECB representative said yesterday that the Eurozone is almost back to pre-pandemic levels in economic terms, and inflation has been more resilient than expected. The biggest problem for the Eurozone remains the energy crisis. In addition, Bank of England Governor Andrew Bailey announced a potential interest rate hike at the December meeting, indicating that the central bank will act decisively to contain inflationary pressures.

Saudi Arabia also believes the next few weeks will be tight in the oil market, so its official selling price to Asia has been increased by $1.40 per barrel. Demand for jet fuel will rise as more governments remove restrictions on air travel.

Asia-Pacific stock markets are slightly down in Tuesday trading. Japan's Nikkei 225 index decreased by 0.5%, Hong Kong's Hang Seng decreased by 0.13%, and Australia's ASX 200 lost 0.24%. At the same time, Shanghai Composite added 0.03%.

The value of Chinese real estate developer Evergrande increased by 0.4%. The company recently raised $145 million through the sale of shares in media company HengTen Networks Group Ltd and is on the eve of the next period of payments on dollar bonds now.

Main market quotes:

S&P 500 (F) 4,701.70 +4.17 (+0.09%)

Dow Jones 36,432.22 +104.27 (+0.29%)

DAX 16,046.52 −7.84 (−0.049%)

FTSE 100 7,300.40 −3.56 (−0.049%)

USD Index 94.03 −0.29 (−0.30%)

Important events for today:
  • – Germany ZEW Economic Sentiment (m/m) at 12:00 (GMT+2);
  • – Eurozone ZEW Economic Sentiment (m/m) at 12:00 (GMT+2);
  • – ECB President Lagarde’s Speech at 15:00 (GMT+2);
  • – US Producer Price Index (m/m) at 15:30 (GMT+2);
  • – US Fed Chair Powell’s Speech at 16:00 (GMT+2);
  • – UK BoE Gov Bailey’s Speech at 18:00 (GMT+2);
  • – US FOMC Member Daly’s Speech at 18:35 (GMT+2).

by Justforex, 2021.11.09

We advise you to get acquainted with the daily forecasts for the major currency pairs.

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

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