Fed delivers 75-bps rate hike, Powell warns “we still have some ways to go” in hawkish presser
US interest rates are now at their highest level since the beginning of 2008: As expected yesterday, the Federal Reserve delivered another huge interest rate hike, extending its most aggressive tightening cycle in decades and pushing rates to the highest level in almost 15 years. The central bank announced it had raised rates by 75 bps for the fourth consecutive meeting, taking the target range to 3.75-4% for the first time since the beginning of 2008.
Powell was no less hawkish: “We still have some ways to go, and incoming data since our last meeting suggest that the ultimate level of interest rates will be higher than previously expected,” Fed chair Jay Powell said (pdf) in his post-meeting presser, referring to last month’s poor inflation release.
But officials might decide against a fifth 75-bps hike next month: Powell suggested that the Fed could soon consider slowing the pace of rate increases. “That time is coming, and it may come as soon as the next meeting, or the one after that,” the Financial Times quoted him as saying.
The markets didn’t take this well: US stocks suffered their worst Fed day since the start of 2021, with the S&P 500 falling 2.5% and the tech-heavy Nasdaq tumbling 3.4% in response to Powell’s hawkish press conference.
It’s a sea of red in Asia this morning as traders react to news from Washington. The Hang Seng is leading the way (-2.4%), while the ASX (-1.9%) and the Kospi (-0.6%) are seeing losses. European shares are on course to open lower later this morning while US futures contracts have Wall Street rebounding early in the session.
The story is on all the front pages this morning: Bloomberg | FT | Reuters | Associated Press | WSJ | NYT | CNBC.
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EGX30 |
11,242 |
-1.7% (YTD: -5.9%) |
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USD (CBE) |
Buy 24.14 |
Sell 24.25 |
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USD at CIB |
Buy 24.03 |
Sell 24.13 |
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Interest rates CBE |
13.25% deposit |
14.25% lending |
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Tadawul |
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0.0% (YTD: +2.2%) |
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ADX |
10,433 |
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FTSE 100 |
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Euro Stoxx 50 |
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Brent crude |
USD 95.60 |
+1.0% |
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Natural gas (Nymex) |
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Gold |
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0.0% |
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BTC |
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THE CLOSING BELL-
The EGX30 fell 1.7% at yesterday’s close on turnover of EGP 1.27 bn (15.7% above the 90-day average). Foreign investors were net sellers. The index is down 5.9% YTD.
In the green: Ezz Steel (+3.7%), Alexandria Containers and Cargo Handling (+2.6%) and Telecom Egypt (+1.2%).
In the red: Fawry (-4.5%), GB Auto (-4.3%) and Madinet Nasr Housing and Development (-4.1%).