Fed Delivered A Dovish Statement, Eurozone's Crisis Affected Rate Decisions The Fed delivered a dovish FOMC statement in June, citing high unemployment, subdued inflation, modest income growth, weak housing market, tight credit, as well as 'less supportive' financial conditions are reasons for keeping the policy rate 'exceptionally low' (0-0.25%) for an 'extended period'. Read more... BOE Diverged on Rate Decision. One Favored Rate Hike BOE's minutes for June's meeting unveiled one of the policymakers favored hiking the policy rate although the Committee voted 7-1 to keep the bank rate unchanged at 0.5%. This was the first time in almost 2 years that a rate hike was proposed. The members however voted unanimously for maintaining the asset purchase program unchanged at 200B pound. Read more... UK Pledges to Cut Deficits Aggressively At the emergency Budget, Chancellor of the Exchequer George Osborne delivered the toughest measures including spending cuts and tax hikes to reduce the largest fiscal shortfall among the G-20 countries. Osborne expects the measures will reduce the UK's public sector net borrowing (PSNB) to 20B pound (1.1% of GDP) in 2015/16 from 149B pound (10.1% of GDP) this year. Read more... PBOC Allows RMB To Appreciate. What Are The Implications On The FX Market? People's Bank of China (PBOC) announced on June 19 that it would proceed further with reform of the RMB exchange rate regime and to enhance the RMB exchange rate flexibility. The pledge is welcomed by the market as demonstrated in rallies in equities, commodities and risk-sensitive currencies. China's permission to increase flexibility in RMB diminishes risks of trade tensions between China and the US should benefit economic recovery. Moreover, the move is expected to increase purchasing power in China and thus trigger more demand for commodities and other imports. However, this notion may not materialize amid further tightening in China. Read more... | 
No comments:
Post a Comment