Federal Reserve Raises Rates 50 Basis Points First Time Since 2000 as Expected

The Federal Reserve raised rates by a half of a percent at their May meeting. This was the first time the bank raised rates this much since May 2000 when the Fed was led by Alan Greenspan. The Central Bank raised interest rates by 0.50% (to a target of 6.5%) back then. That was the last time the Fed would ever raise interest rates by that much in one move until day. The rate hike was priced in. The Balance … Continue reading “Federal Reserve Raises Rates 50 Basis Points First Time Since 2000 as Expected”

US Mortgage Applications Rise First Time in Two Months Ahead of Federal Reserve Expected to Raise Rates 50bps

The Mortgage Bankers Association showed mortgage applications in the US rose for the first time in 8 weeks. The 30-year mortgage rate has been moderating as yields stall somewhat ahead of the FOMC with higher house prices in general. The Federal Reserve is expected to rewind to May 2000 today, when “inflationary imbalances,” saw the Fed led by Alan Greenspan raise interest e rates by 0.50% to a target of 6.5%. That was the last time the Fed would ever … Continue reading “US Mortgage Applications Rise First Time in Two Months Ahead of Federal Reserve Expected to Raise Rates 50bps”

Dismal US Q1 GDP Shrank 1.4% vs +1.1% expected

The US economy had the first contraction since early in the pandemic shrining 1.4% in the first quarter after it was expected to grow 1.1%. The decline in U.S. gross domestic product was a sharp reversal from the 6.9% annual growth rate in the fourth quarter, the Commerce Department said Thursday. The drop in GDP was fueled by a widening trade deficit. Fading government stimulus spending related to the pandemic weighed on GDP. USA Advance Q1 2022 GDP highlights The … Continue reading “Dismal US Q1 GDP Shrank 1.4% vs +1.1% expected”

US Mortgage Applications Fall for Sixth Straight Week as Mortgage Rates Surge to Highest Since 2010

The Mortgage Bankers Association showed mortgage applications in the US fell for the 6th straight week. Down 5% in the previous week as mortgage rates continue to lurch higher. The refinancing index sank 7.7% and the purchase index 3%. The average contract rate on a 30-year fixed-rate mortgage increased to 5.2%, the highest since 2010, from 5.13%. This year’s surge in mortgage rates was hardly unforeseen, given the record lows reached in the pandemic period and concerns about high U.S. … Continue reading “US Mortgage Applications Fall for Sixth Straight Week as Mortgage Rates Surge to Highest Since 2010”

ECB Leaves Rates Unchanged as Expected, Stresses on Flexibility in Making Future Decisions

ECB left rates unchanged as expected in April. The bank left deposit facility interest rates at -.50% and held steady rates on the main refinancing operations and on the marginal lending facility unchanged. ECB reaffirmed commitment to end bond purchases in Q3 this year. Stresses on flexibility when it comes to making any future decisions. ECB Monetary Policy Decision 14 April 2022 Deposit facility rate -0.50% Main refinancing rate 0.00% Marginal lending facility 0.25% Highlights Reaffirms that APP purchases will … Continue reading “ECB Leaves Rates Unchanged as Expected, Stresses on Flexibility in Making Future Decisions”

Monetary Authority of Singapore Tightened Monetary Policy to Slow Inflation’s Momentum 

The Monetary Authority of Singapore (MAS), Singapore’s central bank tightened its monetary policy on Thursday. The MAS manages monetary policy through exchange rate settings, rather than interest rates. The authority re-centered the mid-point of the Nominal Effective Exchange Rate, or S$NEER, at the prevailing level of the S$NEER. It also increased slightly the rate of appreciation of the policy band. The MAS adjusts its policy via three levers: the slope, mid-point and width of the policy band. The Monetary Authority of … Continue reading “Monetary Authority of Singapore Tightened Monetary Policy to Slow Inflation’s Momentum “

Bank of Canada Raises Rates 0.50% With Substantial Upward Revision on Inflation

Bank of Canada raised overnights rate by half a percentage point from 0.50% to 1.0%. The last time the BoC raised its benchmark rate by a half percentage point was over two decades ago, in May 2000. The bank also said it would begin reducing the assets on its balance sheet on April 25. The Bank of Canada revised sharply upward its outlook for inflation, while also increasing the growth forecast for 2022. The Bank of Canada raised the overnight … Continue reading “Bank of Canada Raises Rates 0.50% With Substantial Upward Revision on Inflation”

Reserve Bank of New Zealand Raised Rates 50 Basis Points to Help Reduce Risks of Rising Inflation Expectations.

The Reserve Bank of New Zealand raised its Official Cash Rate by 50 bps to 1.00%, as expected. The RBNZ also left the door open to another similar large increase at its next meeting in May. central bank will not reinvest QE proceeds and bond holdings will begin decreasing by NZD5 billion per year in July. The Reserve Bank of New Zealand raised the cash rate to 1.5% from 1.0%. The follows quarter-percentage-point increases at each of its October, November … Continue reading “Reserve Bank of New Zealand Raised Rates 50 Basis Points to Help Reduce Risks of Rising Inflation Expectations.”

Uncertainty About the Economic Outlook Remains Extraordinarily High says NY Fed Williams

The New York Fed president John Williams, who is a voting member was speaking to a symposium at Princeton University continued with his hawkish tilt. He said the process of reducing the size of the Federal Reserve’s balance sheet could start at the next meeting, May 3 & 4. He also focused on familiar themes saying and risks to the inflation outlook are particularly acute. The Fed holds around US$9 trillion of Treasury bonds and mortgage-backed securities. “These actions should enable us … Continue reading “Uncertainty About the Economic Outlook Remains Extraordinarily High says NY Fed Williams”

Swiss National Bank’s Zurbruegg Says Not Focus of Monetary Policy to Curb Risk to Financial System Vulnerabilities

The Swiss National Bank Vice Chairman Fritz Zurbrügg in a speech in Geneva Tuesday said the focus of monetary policy is price stability and economic developments, and not curbing financial system vulnerabilities”. He added “Moreover, we have observed an increase in affordability risks over recent years.” “In Switzerland, vulnerabilities in the residential real estate and mortgage markets have increased since the onset of the pandemic,” Zurbruegg said in a speech in Geneva. “Moreover, we have observed an increase in affordability risks … Continue reading “Swiss National Bank’s Zurbruegg Says Not Focus of Monetary Policy to Curb Risk to Financial System Vulnerabilities”