© Reuters 5 big financial market events this week: sharp interest rate rises and shrinking balance sheets may continue to fluctuate
Investing.com – This week, investors’ focus was entirely on the Federal Reserve. The Federal Reserve will hold an interest rate meeting on Wednesday, with the bank widely expected to raise interest rates by 75 basis points for the third time in a row.
Meanwhile, the Fed is not the only central bank to hold an interest rate meeting this week. The central banks of Britain, Switzerland and Japan are also due to release their latest interest rate decisions as global pressures curb inflation.
Meanwhile, US stocks are likely to remain volatile this week amid fears that rising interest rates will cause the economy to struggle.
Here are the top 5 things investors need to watch in the financial markets this week:
1.The Fed’s meeting on interest rates may raise interest rates again 75an idea
Better-than-expected US data for August bolstered market expectations for another sharp rate hike from the Federal Reserve on Wednesday.
At the moment, the market has already priced in a 75 basis point rate hike, but some investors are starting to think that a full percentage point hike is not impossible, which was unthinkable before.
Investors will need to pay close attention to the pace of the Fed’s monetary policy tightening and views on economic growth, the duration of inflation and the shrinking of its balance sheet.
Some worry that the Fed’s process of trimming its $95 billion-a-month balance sheet could harm market liquidity and weigh on the economy.
2.The Bank of England will announce an interest rate decision, fiscal and monetary policy going against the grain
An interest rate meeting will take place on Thursday, which was originally due to take place last week but was postponed by a week due to the funeral of Queen Elizabeth II.
Analysts expect the Bank of England to raise interest rates by 50 basis points, raising interest rates to 2.25%, although others believe a rise of 75 basis points is possible.
The interest rate meeting is the first meeting since the British government set a cap on energy prices. Caps on energy prices are expected to moderate inflation, thereby increasing consumer discretionary reserves, but the additional reserves could also support inflation for a longer period.
In addition, Britain’s new Chancellor of the Exchequer, Kwasi Kwarteng, will deliver a speech on Friday (23rd), when he is expected to announce details of the new government’s fiscal policy, including how to reduce British taxes and fees and other new Prime Ministers. Liz Truss’ previous campaign promises.
At the moment, the UK is tightening monetary policy on the one hand, but increasing fiscal expenditure on the other hand. The opposite of monetary and fiscal policies highlights the serious economic challenges the UK is facing. face them. The UK is now one of the highest among the world’s major economies and at risk of recession.
3.Many central banks around the world will also hold interest rate meetings
At a meeting on Thursday, the bank is expected to raise rates by 75 basis points, in line with the European Central Bank but well ahead of Switzerland.
Elsewhere in Europe, rate rises are also expected as inflation continues to beat expectations, with a rate meeting on Thursday.
A meeting will also be held on Thursday amid speculation that Japanese authorities are poised to intervene in the foreign exchange market to support a 24-year low.
The Yen fell sharply as the Federal Reserve continued to tighten policy aggressively, while the Bank of Japan insisted on unprecedented easing.
4.PMI will be released in several placesdata
The Eurozone and UK are expected to release PMI data this week.
The euro zone may enter recession earlier than previously expected, after remaining below the 50-year-old boom line for two consecutive months, underscoring the impact of the energy crisis and the tightening of monetary policy.
On Thursday, the World Bank warned of a sharp slowdown in the world economy, with central banks raising interest rates at the same time, even if the “hit to the global economy next year is moderate and that it could slide into recession”.
5. The US stock market may continue to fluctuate
US stocks ended lower on Friday (September 19) as inflation concerns, looming interest rate hikes and dire economic warning signs posted their biggest weekly percentage drop since June,
There is no sign that the volatility in the US stock market will ease, as inflation data remains high, the Federal Reserve may continue to increase the rate of interest rate increases faster and longer, and the possibility of recession will also increase.
David Carter, managing director of JPMorgan, said on Friday: “While the market expects the Fed to raise rates significantly next week, there is huge uncertainty and concern about future rate hikes. The Fed is doing what it needs to do. the pain, the markets and the economy will heal on their own.”
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