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Morning bell: FED & RBNZ keep rates

The Federal Reserve kept rates unchanged on Wednesday, signaling however that a further rate hike could be possible even as early as March. The Committee is watching the global economy very closely and is basing its decisions on the effect on the labor market and inflation. Experts are actually looking for the possibility of three Fed rate hikes before the end of the year. The US Dollar lost some ground against the Euro but managed to rise against its other major opponents.

Wall Street took a dive following the FOMC Statement as the Fed failed to give any strong indications. The S&P 500 (USA500) has been down 8% so far this year, while the corporate earnings reports are just adding to the drop. Apple shares dropped more than 6.5% on Wednesday marking that the biggest fall in two years, while Boeing forecasted a below expectations earnings and less plane deliveries for 2016. Ebay’s revenue and profit forecasts were also weaker than expected as it is struggling against the Dollar and increased online competition. Only Facebook managed to report a 52% increase in quarterly revenue thanks to its ad sales; Facebook shares were up almost 12% in after-hours trading.

The Reserve Bank of New Zealand also held its interest rate at 2.50% as expected, it stated though that further easing would be necessary due to the low inflation. This came in contrast to its last meeting in December where the RBNZ stated that it’s possibly done with rate cutting. This send the kiwi down to 0.64153 against the US Dollar but it later managed to steady around 0.6443. The Bank of Japan’s decision is expected early on Friday where further easing is possibly not likely again, although the market volatility could affect the final decision.

Thursday’s main news is the US Unemployment Claims at 13:30 GMT.

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