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The Fed has decided to keep interest rates unchanged, with Chairman Jerome Powell emphasizing a cautious approach to potential cuts amid rising risks to unemployment and inflation. He highlighted the strength of the US economy and consumer spending, while deflecting questions about political criticism and fiscal policy. The outlook for the US dollar remains positive, contingent on successful international trade deals.
Oil markets experienced volatility, with Brent initially rising on hopes of easing US-China trade tensions before retreating as the Federal Reserve maintained interest rates. The EIA reported a smaller decline in US crude inventories compared to API data, though levels remain at their lowest since March. Notably, jet fuel demand surged to its highest since December 2019, contributing to an all-time seasonal high in the four-week average.
EUR/USD is testing support at 1.1300, with analysts noting that a drop below 1.1250/1260 could significantly impact long positions. The recent dollar bounce has been weak, and market participants are awaiting developments from the US-UK trade deal. Investors are reminded to conduct thorough research before making decisions, as all investments carry risks.
The Bank of England's upcoming meeting is anticipated to influence market dynamics, with a 25bp rate cut to 4.25% expected. Analysts suggest that the phrasing regarding a "gradual and careful" approach to monetary policy will be crucial; maintaining this could support a sterling rally. Market pricing indicates expectations for multiple rate cuts this year, while GBP/USD may be affected by global risk sentiment.
US equity markets saw modest gains as the Federal Reserve maintained interest rates, with the S&P 500 up 0.4% and the Dow Jones rising 0.7%. Fed Chairman Powell's cautious tone reassured investors amid concerns of stagflation, while strong earnings from companies like Walt Disney bolstered market sentiment.Asian markets followed suit, with Japan's Nikkei 225 climbing 1.04%. Meanwhile, the Bank of England is expected to cut its benchmark rate to 4.25%, reflecting economic pressures, and President Trump is set to announce a new UK-US trade framework aimed at reducing tariffs.
The UBS Swiss real estate bubble index rose to 0.29 points in the first quarter of 2024, indicating a moderate risk of a bubble, particularly for owner-occupied housing. Despite a slight increase in prices—1.5% quarterly and 3.2% year-on-year—experts predict a price correction is unlikely due to moderate mortgage demand and a slowing construction sector. The Swiss National Bank's anticipated interest rate cut is expected to temper price growth, with owner-occupied housing prices projected to rise by 3% to 4% this year.
Rabobank forecasts the Pound Sterling will underperform against the Euro over the next year, predicting an exchange rate of 1.1494 as EUR/GBP rises to 0.87. Factors contributing to this outlook include stagnant UK growth and fiscal constraints, contrasted with optimism surrounding Germany's fiscal stimulus. The Bank of England is expected to cut rates, further impacting GBP's performance.
Central banks are poised for key rate decisions amid ongoing tariff uncertainties. The Bank of England is expected to lower its rate to 4.25%, while Norges Bank and Riksbank are likely to maintain their rates at 4.50% and 2.25%, respectively. In the US, the Fed remains steady, with Chair Powell indicating no immediate rate cuts despite recession risks from tariffs.
The US Federal Reserve has maintained its key interest rate at 4.25% to 4.5%, exercising caution amid a first-quarter GDP decline and rising inflation expectations. While there are no clear signs of an imminent recession, the Fed faces a conflict of objectives, with further rate cuts unlikely until fall. Concerns about the Fed's independence and potential political influence are growing, which could impact the US economy.
The US Federal Reserve held its benchmark interest rate steady at 4.25% to 4.50% on May 7, 2025, amid rising inflation and job market uncertainties, marking the third consecutive meeting without a change. Fed Chair Jerome Powell noted increased risks of higher unemployment and inflation, with Q1 GDP contracting by 0.3% due to a surge in imports ahead of expected tariffs. Following the Fed's decision, the Central Bank of the UAE maintained its base rate at 4.40%, reflecting its close alignment with US monetary policy.
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