Oil is headed for a fourth consecutive weekly slide, as concerns over demand from the world's biggest economies are outweighing increased geopolitical tensions. Brent traded near $80 a barrel after a 1.6 per cent drop in yesterday's session, with West Texas Intermediate below $77. Factory gauges in the US and China both showed a contraction on Thursday, indicating signs of weakness in manufacturing.

Although prices did surge briefly on Wednesday, after the killing of Hamas and Hezbollah leaders that raised tension in West Asia, the pressure on oil prices has not abated. There are still concerns about demand from China, the world's biggest oil importer, over its economic challenges. Bolstering the downward pressure was Thursday's reiteration by OPEC+ in a monitoring meeting of its plan to boost production in the next quarter.

It is the longest streak of weekly declines since December, with futures still modestly higher for the year. Some support has come from expectations that US monetary easing would perk up consumption, with Federal Reserve Chair Jerome Powell hinting an interest rate cut could happen as soon as September.

Other market metrics also suggest a less tight market. While still in a bullish backwardated structure, the gap between Brent's two nearest contracts has also narrowed. The spread was last trading at 60 cents a barrel in backwardation versus more than a dollar two weeks ago.

In summary, demand concerns in key economies and anticipated supply increases from OPEC+ weigh heavily on oil prices. With surging geopolitical tensions adding to the market's volatility, the outlook remains murky for oil, underscoring the tricky balance between supply, demand, and external drivers impacting the energy market.

Oil is headed for a fourth consecutive weekly slide, as concerns over demand from the world's biggest economies are outweighing increased geopolitical tensions. Brent traded near $80 a barrel after a 1.

Oil is headed for a fourth consecutive weekly slide, as concerns over demand from the world's biggest economies are outweighing increased geopolitical tensions. Brent traded near $80 a barrel after a 1.6 per cent drop in yesterday's session, with West Texas Intermediate below $77. Factory gauges in the US and China both showed a contraction on Thursday, indicating signs of weakness in manufacturing. Although prices did surge briefly on Wednesday, after the killing of Hamas and Hezbollah leaders that raised tension in West Asia, the pressure on oil prices has not abated. There are still concerns about demand from China, the world's biggest oil importer, over its economic challenges. Bolstering the downward pressure was Thursday's reiteration by OPEC+ in a monitoring meeting of its plan to boost production in the next quarter. It is the longest streak of weekly declines since December, with futures still modestly higher for the year. Some support has come from expectations that US monetary easing would perk up consumption, with Federal Reserve Chair Jerome Powell hinting an interest rate cut could happen as soon as September. Other market metrics also suggest a less tight market. While still in a bullish backwardated structure, the gap between Brent's two nearest contracts has also narrowed. The spread was last trading at 60 cents a barrel in backwardation versus more than a dollar two weeks ago. In summary, demand concerns in key economies and anticipated supply increases from OPEC+ weigh heavily on oil prices. With surging geopolitical tensions adding to the market's volatility, the outlook remains murky for oil, underscoring the tricky balance between supply, demand, and external drivers impacting the energy market.

Oil prices plunge as demand concerns and geopolitical tensions bite

Growth in worker productivity in the US gained steam, underscoring lighter labour-cost pressures and a better outlook for inflation. Nonfarm productivity, or the amount an hourly worker produces per hour, rose at an annualised rate of 2.3 per cent last quarter, the Labor Department's Bureau of Labor Statistics said. That was up from the 0.4 per cent growth pace in the January-March period, which was revised upward.

Economists surveyed by Reuters had estimated a 1.7 per cent productivity growth rate, following a previously reported 0.2 per cent rise in the first quarter. Over the past year, productivity has advanced at a robust 2.7 per cent pace.

Unit labour costs, which relate the price of labour to a single unit of output, advanced at a 0.9 per cent rate in the April-June quarter. The first quarter was revised down to indicate a 3.8 per cent increase in unit labour costs from the initially reported 4.0 per cent. On a year-over-year basis, labour costs advanced at a modest 0.5 per cent rate.

The government reported on Wednesday that annual labour costs posted their smallest increase in two and a half years in the second quarter. The Federal Reserve on Wednesday kept its benchmark overnight interest rate in a range of 5.25-5.50 per cent, where it has been since last July. The Fed has indicated it could reduce borrowing costs as soon as its next policy-setting meeting in September. 
&nbsp; 
Compensation for workers rose at a 3.3 per cent rate last quarter, down from the 4.2 per cent pace in quarter 1. Year over year, compensation advanced at a 3.2 per cent rate.

That means, all told, the productivity surge of the US workforce is very auspicious for the economy, keeping labour costs in check and supporting a benign outlook on inflation. Couple that with an ultra-cautious approach to interest rates by the Federal Reserve, and it points to a balanced path ahead for growth and stability.

Growth in worker productivity in the US gained steam, underscoring lighter labour-cost pressures and a better outlook for inflation. Nonfarm productivity, or the amount an hourly worker produces per hour, rose at an annualised rate of 2.

Growth in worker productivity in the US gained steam, underscoring lighter labour-cost pressures and a better outlook for inflation. Nonfarm productivity, or the amount an hourly worker produces per hour, rose at an annualised rate of 2.3 per cent last quarter, the Labor Department's Bureau of Labor Statistics said. That was up from the 0.4 per cent growth pace in the January-March period, which was revised upward. Economists surveyed by Reuters had estimated a 1.7 per cent productivity growth rate, following a previously reported 0.2 per cent rise in the first quarter. Over the past year, productivity has advanced at a robust 2.7 per cent pace. Unit labour costs, which relate the price of labour to a single unit of output, advanced at a 0.9 per cent rate in the April-June quarter. The first quarter was revised down to indicate a 3.8 per cent increase in unit labour costs from the initially reported 4.0 per cent. On a year-over-year basis, labour costs advanced at a modest 0.5 per cent rate. The government reported on Wednesday that annual labour costs posted their smallest increase in two and a half years in the second quarter. The Federal Reserve on Wednesday kept its benchmark overnight interest rate in a range of 5.25-5.50 per cent, where it has been since last July. The Fed has indicated it could reduce borrowing costs as soon as its next policy-setting meeting in September. Compensation for workers rose at a 3.3 per cent rate last quarter, down from the 4.2 per cent pace in quarter 1. Year over year, compensation advanced at a 3.2 per cent rate. That means, all told, the productivity surge of the US workforce is very auspicious for the economy, keeping labour costs in check and supporting a benign outlook on inflation. Couple that with an ultra-cautious approach to interest rates by the Federal Reserve, and it points to a balanced path ahead for growth and stability.

Surge in US worker productivity illuminates positive inflation trajectory

Interest rates of over two-decade highs in the US have impacted the broader economy. The Federal Reserve, in its fight against surging inflation, hiked rates aggressively to the highest in over 20 years. The rate hikes are starting to take a toll on the economy.

The Fed has managed to take the steam of an overheated US economy without pushing it into a recession. However, high interest rates are finally starting to show their effects. In the coming week, the Fed will likely keep rates on hold at its meeting.

Investors, though, are looking for a Fed pivot signal, with expectations for a start to rate cuts as early as September. Until then, though, policymakers need to assess the impact of monetary policy on the economy.

Hans Mikkelsen, managing director of credit strategy at TD Securities, said, ‘There's a tremendous amount of pain and many, many companies that are going bust because of the Fed's monetary policy.’&nbsp;

The US housing market was the most visibly affected by rate hikes. The Fed's policies caused borrowing costs to skyrocket and property prices to soar. The affordability of housing is at a level not seen in over 30 years of data. Usually, companies are less likely to invest and expand when interest rates are high, which acts as a brake on stock prices. But investors have mostly ignored the warnings, sending stock prices soaring to record highs.

Since the Fed began hiking rates in March 2022, the S&amp;P 500 has jumped by almost 25 per cent, increasing household wealth by around $3 trillion. However, households with higher incomes are benefiting from the booming stock market. However, there are signs of a slowing US jobs market, which repeatedly defied expectations of a downturn.

The number of people who have been unemployed for 27 weeks or longer reached 1.5 million in June. That marks the highest level since 2017, barring a brief surge during the pandemic. Many households, especially those with lower incomes are falling back on loan and credit card payments.&nbsp;

Smaller businesses are taking the biggest hit. Projections from Fitch Ratings indicate that the default rate on loans will rise to 5 per cent - 5.5 per cent this year. That would be the highest level since the financial crisis in 2009. Policymakers need to take note and act with caution before permanent economic damage is done.

Interest rates of over two-decade highs in the US have impacted the broader economy. The Federal Reserve, in its fight against surging inflation, hiked rates aggressively to the highest in over 20 years.

Interest rates of over two-decade highs in the US have impacted the broader economy. The Federal Reserve, in its fight against surging inflation, hiked rates aggressively to the highest in over 20 years. The rate hikes are starting to take a toll on the economy. The Fed has managed to take the steam of an overheated US economy without pushing it into a recession. However, high interest rates are finally starting to show their effects. In the coming week, the Fed will likely keep rates on hold at its meeting. Investors, though, are looking for a Fed pivot signal, with expectations for a start to rate cuts as early as September. Until then, though, policymakers need to assess the impact of monetary policy on the economy. Hans Mikkelsen, managing director of credit strategy at TD Securities, said, ‘There's a tremendous amount of pain and many, many companies that are going bust because of the Fed's monetary policy.’ The US housing market was the most visibly affected by rate hikes. The Fed's policies caused borrowing costs to skyrocket and property prices to soar. The affordability of housing is at a level not seen in over 30 years of data. Usually, companies are less likely to invest and expand when interest rates are high, which acts as a brake on stock prices. But investors have mostly ignored the warnings, sending stock prices soaring to record highs. Since the Fed began hiking rates in March 2022, the S&P 500 has jumped by almost 25 per cent, increasing household wealth by around $3 trillion. However, households with higher incomes are benefiting from the booming stock market. However, there are signs of a slowing US jobs market, which repeatedly defied expectations of a downturn. The number of people who have been unemployed for 27 weeks or longer reached 1.5 million in June. That marks the highest level since 2017, barring a brief surge during the pandemic. Many households, especially those with lower incomes are falling back on loan and credit card payments. Smaller businesses are taking the biggest hit. Projections from Fitch Ratings indicate that the default rate on loans will rise to 5 per cent - 5.5 per cent this year. That would be the highest level since the financial crisis in 2009. Policymakers need to take note and act with caution before permanent economic damage is done.

Impact of high interest rates on the US economy

Federal Reserve officials are primed to start trimming borrowing costs in the coming months, with Chairman Jerome Powell potentially hinting at it the following week. The shift comes as worries increase over how to sustain a strong yet moderating labour market.

The central bankers have maintained interest rates at the highest level in more than two decades for more than a year now, and will likely leave them there again when their two-day meeting ends on Wednesday. Instead, investors see Fed officials lowering their benchmark rate in September.

Recent data has been encouraging, with more muted price increases, alongside robust economic growth. However, Fed officials are looking for more reassurance that inflation will continue to trend down toward the central bank's 2 per cent target.

The softening of price pressures, paired with an upward creep in the unemployment rate, has brought both of the Fed's dual goals—maximum employment and stable prices—into greater alignment. While the Fed would like to keep a leash on inflation, it would also not want to knock the labour market off its perch by keeping rates high for an extended period.

Much attention now turns to the July jobs report and other labour market indicators that will shed light on the question of whether the slowing in hiring is accelerating. Nonfarm payrolls are forecast to advance by 178,000 — a healthy but more moderate pace. The unemployment rate, which has climbed in each of the past three months, is seen holding at 4.1 per cent.

Hurricane Beryl, which struck Texas earlier this month, also lends an air of uncertainty and could impact hours worked. Additionally, new data on job openings and quitting, out Tuesday, will be watched closely as well.

Also out Tuesday is the Conference Board's consumer confidence index, which will give a read on how consumers are feeling. Investors will also get a better sense of the health of the manufacturing sector with the Institute for Supply Management's factory report on Thursday.

Here, the delicate balance between containing inflation and sustaining employment that the Fed would want to maintain is at stake. Indeed, Powell's forthcoming communication will be important in setting expectations regarding the Fed's policy direction in the months ahead.

Federal Reserve officials are primed to start trimming borrowing costs in the coming months, with Chairman Jerome Powell potentially hinting at it the following week.

Federal Reserve officials are primed to start trimming borrowing costs in the coming months, with Chairman Jerome Powell potentially hinting at it the following week. The shift comes as worries increase over how to sustain a strong yet moderating labour market. The central bankers have maintained interest rates at the highest level in more than two decades for more than a year now, and will likely leave them there again when their two-day meeting ends on Wednesday. Instead, investors see Fed officials lowering their benchmark rate in September. Recent data has been encouraging, with more muted price increases, alongside robust economic growth. However, Fed officials are looking for more reassurance that inflation will continue to trend down toward the central bank's 2 per cent target. The softening of price pressures, paired with an upward creep in the unemployment rate, has brought both of the Fed's dual goals—maximum employment and stable prices—into greater alignment. While the Fed would like to keep a leash on inflation, it would also not want to knock the labour market off its perch by keeping rates high for an extended period. Much attention now turns to the July jobs report and other labour market indicators that will shed light on the question of whether the slowing in hiring is accelerating. Nonfarm payrolls are forecast to advance by 178,000 — a healthy but more moderate pace. The unemployment rate, which has climbed in each of the past three months, is seen holding at 4.1 per cent. Hurricane Beryl, which struck Texas earlier this month, also lends an air of uncertainty and could impact hours worked. Additionally, new data on job openings and quitting, out Tuesday, will be watched closely as well. Also out Tuesday is the Conference Board's consumer confidence index, which will give a read on how consumers are feeling. Investors will also get a better sense of the health of the manufacturing sector with the Institute for Supply Management's factory report on Thursday. Here, the delicate balance between containing inflation and sustaining employment that the Fed would want to maintain is at stake. Indeed, Powell's forthcoming communication will be important in setting expectations regarding the Fed's policy direction in the months ahead.

US Fed poised for potential rate cut as economic indicators signal balance

Federal Reserve Bank of San Francisco President Mary Daly reiterated that she would want to see firmer signs that inflation is heading back toward the Fed's 2 per cent target before the central bank considers cutting interest rates. In comments at a Dallas Fed event, Daly expressed concerns about the current state of price stability.

"We don't have price stability right now," Daly noted. "We've had some really good incoming data, but even with the incoming data on inflation being positive and good data after earlier this year, we're not there yet" on getting inflation sustainably back to the 2 per cent target, she said.

Along these lines, Daly described how tight of a tightrope walk monetary policy is on at present. "It's a risk to act too soon to normalize interest rates and then have inflation stuck below or above our target and it's a risk to hold on too long and make the labor market falter," she said.

She further advised patience on the prospect of rate cuts, saying Fed officials have to "balance the costs of acting fast and being wrong," and avoiding a policy mistake is important.

Although the Fed might consider cutting rates in September, some voices have joined in to pitch their case for action at the July meeting in view of cooling price pressures. But Daly's comments suggest a more measured approach: one that seeks long-term stability over immediate action.

Essentially, Mary Daly's comments reflect the patience the Fed has toward attending to inflation and interest rates. Her emphasis on patience and being careful mirrors broader challenges at the central bank in the context of attaining dual mandate objectives of price stability and full employment. While the Fed decides to tread through such complexities, focus has been made on data-driven decisions so that sustainable economic growth can be warranted.

Federal Reserve Bank of San Francisco President Mary Daly reiterated that she would want to see firmer signs that inflation is heading back toward the Fed's 2 per cent target before the central bank considers cutting interest rates.

Federal Reserve Bank of San Francisco President Mary Daly reiterated that she would want to see firmer signs that inflation is heading back toward the Fed's 2 per cent target before the central bank considers cutting interest rates. In comments at a Dallas Fed event, Daly expressed concerns about the current state of price stability. "We don't have price stability right now," Daly noted. "We've had some really good incoming data, but even with the incoming data on inflation being positive and good data after earlier this year, we're not there yet" on getting inflation sustainably back to the 2 per cent target, she said. Along these lines, Daly described how tight of a tightrope walk monetary policy is on at present. "It's a risk to act too soon to normalize interest rates and then have inflation stuck below or above our target and it's a risk to hold on too long and make the labor market falter," she said. She further advised patience on the prospect of rate cuts, saying Fed officials have to "balance the costs of acting fast and being wrong," and avoiding a policy mistake is important. Although the Fed might consider cutting rates in September, some voices have joined in to pitch their case for action at the July meeting in view of cooling price pressures. But Daly's comments suggest a more measured approach: one that seeks long-term stability over immediate action. Essentially, Mary Daly's comments reflect the patience the Fed has toward attending to inflation and interest rates. Her emphasis on patience and being careful mirrors broader challenges at the central bank in the context of attaining dual mandate objectives of price stability and full employment. While the Fed decides to tread through such complexities, focus has been made on data-driven decisions so that sustainable economic growth can be warranted.

Fed's Daly urges caution before considering rate cuts

Is the US Federal reserve changing its tune on rates? FED chair Jerome Powell said that authorities are becoming more cautious about the risks to the labour market from high borrowing prices. He, however, added that the central bank was looking for additional indications that inflation is slowing down.

Rate cut bets rise after Powell's speech

Federal Reserve Governor Lisa Cook was upbeat on the trajectory of the US economy on Wednesday, saying that inflation may further go down without a huge jump in unemployment.&nbsp;

In prepared remarks for an economics conference in Australia, Cook drew succinctly to point at evidence that, in her view, a "soft landing" for the US economy was lining up.

Based on Cook, the Fed's preferred measure of inflation recently hovered at 2.6 per cent, just a shade above the central bank's 2 per cent target, while the well-behaved unemployment rate was at 4.1 per cent.

"My baseline forecast...is that inflation will continue to move toward target over time, without much further rise in unemployment," Cook said

She did acknowledge that soft landings—the pressures of inflation going down without a recession—have occurred only a few times in the history of economies, but she also emphasised the rapid deflation of inflation and holding unemployment par as being bright spots for that scenario. No doubt this is a situation where timing with regard to the easing of monetary policy by the Fed makes a difference.

Soft landings are "more likely when policy easing began with inflation already close to target and when there was a relatively firm growth backdrop," she said. "In the US, what I have seen so far appears to be consistent with a soft landing: Inflation has fallen significantly from its peak, and the labour market has gradually cooled but remains strong."

The next meeting of the Federal Reserve is on July 30-31, and investors are now betting on possible rate cuts as early as the next meeting in September.&nbsp;

Cook's comment infers that the Fed is watching trends in inflation and labour market stability to achieve a balanced approach to monetary policy adjustments.

Federal Reserve Governor Lisa Cook was upbeat on the trajectory of the US economy on Wednesday, saying that inflation may further go down without a huge jump in unemployment.

Federal Reserve Governor Lisa Cook was upbeat on the trajectory of the US economy on Wednesday, saying that inflation may further go down without a huge jump in unemployment. In prepared remarks for an economics conference in Australia, Cook drew succinctly to point at evidence that, in her view, a "soft landing" for the US economy was lining up. Based on Cook, the Fed's preferred measure of inflation recently hovered at 2.6 per cent, just a shade above the central bank's 2 per cent target, while the well-behaved unemployment rate was at 4.1 per cent. "My baseline forecast...is that inflation will continue to move toward target over time, without much further rise in unemployment," Cook said She did acknowledge that soft landings—the pressures of inflation going down without a recession—have occurred only a few times in the history of economies, but she also emphasised the rapid deflation of inflation and holding unemployment par as being bright spots for that scenario. No doubt this is a situation where timing with regard to the easing of monetary policy by the Fed makes a difference. Soft landings are "more likely when policy easing began with inflation already close to target and when there was a relatively firm growth backdrop," she said. "In the US, what I have seen so far appears to be consistent with a soft landing: Inflation has fallen significantly from its peak, and the labour market has gradually cooled but remains strong." The next meeting of the Federal Reserve is on July 30-31, and investors are now betting on possible rate cuts as early as the next meeting in September. Cook's comment infers that the Fed is watching trends in inflation and labour market stability to achieve a balanced approach to monetary policy adjustments.

US Fed's soft landing bet: inflation falls, jobs steady, rate cuts loom

Oil prices nudged higher as signs of another inventory draw in the US offset concerns on the timeline for Federal Reserve interest-rate cuts following Chair Jerome Powell's testimony.

Brent crude hovered close to $85 a barrel from a slide of more than 3 per cent in the previous three sessions, and West Texas Intermediate well below $82.

The American Petroleum Institute stated that the US crude stockpiles had a drop of 1.92 million barrels for the last week, with a big draw at the key Cushing, Oklahoma hub, according to sources with knowledge of the data. This comes after a more than 12 million-barrel plunge in stockpiles the prior week.

Despite recent volatility, oil prices are still easier for the year to date, underpinned by OPEC+ production cuts allied to expectations of easier monetary policy in the US. Powell said on Tuesday he was watching labour market weaknesses closely, but more evidence is needed of a slowdown in inflation before cutting borrowing costs.

This subdued crude trading, in particular, has weighed on measures of volatility. Brent's implied volatility—a forecast of likely movement in oil futures based on options pricing—is near its lowest level in about six years.

Traders now Await the monthly report from the Organization of the Petroleum Exporting Countries, due later in the day, which is expected to shed more light on the global market outlook. A similar report by the International Energy Agency is due tomorrow.

To sum up, oil prices inched up, with US crude inventories trimming a bit of the excess and supported by the broader market, underpinned by OPEC+ supply cuts and possible shifts in US monetary policy. The forthcoming reports from OPEC and IEA will have wide attention for further signs of the trend.

Oil prices nudged higher as signs of another inventory draw in the US offset concerns on the timeline for Federal Reserve interest-rate cuts following Chair Jerome Powell's testimony.

Oil prices nudged higher as signs of another inventory draw in the US offset concerns on the timeline for Federal Reserve interest-rate cuts following Chair Jerome Powell's testimony. Brent crude hovered close to $85 a barrel from a slide of more than 3 per cent in the previous three sessions, and West Texas Intermediate well below $82. The American Petroleum Institute stated that the US crude stockpiles had a drop of 1.92 million barrels for the last week, with a big draw at the key Cushing, Oklahoma hub, according to sources with knowledge of the data. This comes after a more than 12 million-barrel plunge in stockpiles the prior week. Despite recent volatility, oil prices are still easier for the year to date, underpinned by OPEC+ production cuts allied to expectations of easier monetary policy in the US. Powell said on Tuesday he was watching labour market weaknesses closely, but more evidence is needed of a slowdown in inflation before cutting borrowing costs. This subdued crude trading, in particular, has weighed on measures of volatility. Brent's implied volatility—a forecast of likely movement in oil futures based on options pricing—is near its lowest level in about six years. Traders now Await the monthly report from the Organization of the Petroleum Exporting Countries, due later in the day, which is expected to shed more light on the global market outlook. A similar report by the International Energy Agency is due tomorrow. To sum up, oil prices inched up, with US crude inventories trimming a bit of the excess and supported by the broader market, underpinned by OPEC+ supply cuts and possible shifts in US monetary policy. The forthcoming reports from OPEC and IEA will have wide attention for further signs of the trend.

Is the Fed's hesitation fuelling a surge in oil prices?

This week, US equities eked out an all-time high on Friday as investors expected the June jobs report to entice the Federal Reserve to consider a rate cut.&nbsp;

The benchmark S&amp;P 500 inched roughly 0.6 per cent above a record close in the abbreviated session on Wednesday, and the Dow Jones Industrial Average was up 0.2 per cent. The tech-heavy Nasdaq Composite advanced 0.9 per cent, driven by gains from major tech companies.

Leading the market were Apple (AAPL), Amazon (AMZN), Alphabet (GOOG, GOOGL), and Meta (META), whose stocks hit record highs on Friday. &nbsp;

All three major gauges were in the green for the first trading week in the second half of the year.

Most focus was on the labour market Friday after 206,000 workers joined the US economy in June — blowing past the Wall Street expectation for 190,000. However, the unemployment rate peaked at 4.1 per cent, the highest since November 2021, signalling a cooling job market.

Indications of slackening in labour data have been supporting the view that inflation would slow further, providing room for the Federal Reserve to lower interest rates from their twenty-year highs. Traders were now pricing in a 75 per cent chance of a cut in September, according to CME's FedWatch tool. &nbsp;

The 10-year Treasury yield dipped to 4.27 per cent, sliding further after being down through much of the week.

Investors are scouring Friday's jobs data for signs of whether the slowing job growth suggests labour markets are normalising post-pandemic or is an early signal of a broader economic slowdown.

This week, US equities eked out an all-time high on Friday as investors expected the June jobs report to entice the Federal Reserve to consider a rate cut. The benchmark S&P 500 inched roughly 0.

This week, US equities eked out an all-time high on Friday as investors expected the June jobs report to entice the Federal Reserve to consider a rate cut. The benchmark S&P 500 inched roughly 0.6 per cent above a record close in the abbreviated session on Wednesday, and the Dow Jones Industrial Average was up 0.2 per cent. The tech-heavy Nasdaq Composite advanced 0.9 per cent, driven by gains from major tech companies. Leading the market were Apple (AAPL), Amazon (AMZN), Alphabet (GOOG, GOOGL), and Meta (META), whose stocks hit record highs on Friday. All three major gauges were in the green for the first trading week in the second half of the year. Most focus was on the labour market Friday after 206,000 workers joined the US economy in June — blowing past the Wall Street expectation for 190,000. However, the unemployment rate peaked at 4.1 per cent, the highest since November 2021, signalling a cooling job market. Indications of slackening in labour data have been supporting the view that inflation would slow further, providing room for the Federal Reserve to lower interest rates from their twenty-year highs. Traders were now pricing in a 75 per cent chance of a cut in September, according to CME's FedWatch tool. The 10-year Treasury yield dipped to 4.27 per cent, sliding further after being down through much of the week. Investors are scouring Friday's jobs data for signs of whether the slowing job growth suggests labour markets are normalising post-pandemic or is an early signal of a broader economic slowdown.

Record highs and rate cut hopes: what’s driving US equities?

Jerome Powell, US Federal Reserve chair, maintains his hawkish stance on interest rate cuts despite falling inflation.&nbsp;

Central bankers still foresee three interest-rate cuts before the end of 2024, but leaders are waiting and watching for more data to confirm inflation continues to slow.

Policymakers Monday stressed that they want to see proof that inflation is definitively on its way back to the Fed's target of 2 per cent before they ease off on borrowing costs.

Here is a look at some of the key economic indicators the Fed is keeping a close eye on.

Employment

The economy created a healthy 303,000 jobs in February, above expectations.

Payrolls for the prior two months were also revised higher. The jobless rate surprisingly fell to 3.8 per cent, the 26th consecutive month it has been below 4 per cent — the longest streak since the 1960s.

Meanwhile, inflationary pressures remained muted as wages only rose 3.4 per cent on a year-over-year basis. Richmond Fed President Thomas Barkin said, "The data pointed to a 'quite strong jobs report'.

The Fed appears increasingly confident that further job growth might not prevent inflation from falling lower, especially if labour supply increases and wage growth moderates.

Both these factors occurred in March in the way that the Labour force developed at the fastest pace since August and annual wage growth softened to the lowest since June 2021.

But wage growth remains above the 3.0 per cent-3.5 per cent range that most policymakers believe aligns with the Fed's 2 per cent inflation target.

Available Positions

The JOLTS is closely watched by none other than Federal Reserve Chair Jerome Powell, coming from the United States Department of Labour.

The JOLTS is a measure of the labour supply-demand imbalance that indicates how many openings exist for every unemployed person actively looking for work.

This ratio had been rapidly falling toward pre-pandemic levels; however, since October, it has consistently remained high within the range of 1.35 – 1.43, considered way above pre-pandemic levels of 1.2 to 1.

February's figures were the latest available, and they showed that the ratio had decreased as the number of job seekers climbed, pushing up the jobless rate.

Quits rate, another measure aside from the ones mentioned in JOLTS, has shown some returning to pre-pandemic levels.

Inflation

Fed follows the inflation measures set by the Personal Consumption Expenditures price index and also has a target rate using the same measure.

The PCE index rose at a 2.5 per cent annual rate in February, up from 2.4 per cent in January.

Core inflation, excluding volatile food and energy prices, rose at a 2.8 per cent rate, down slightly from the upwardly revised January figure of 2.9 per cent.

Neither figure inspires strong confidence among Fed policymakers regarding a consistent decline in inflation towards their target.

The Consumer Price Index data was also worrying. The CPI gained 3.2 per cent on year in February, topping forecasts and the 3.1 per cent rise the previous month.

However, core CPI fell only a bit to 3.8 per cent from 3.9 per cent, excluding food and energy costs, a possible indicator that the Fed has a long fight with inflation ahead.

Not having to factor in huge increases for gasoline, which accounted for over half the increase, and housing, which was a big contributor to overall expense increases, ups the CPI.

It remains to be seen if asset-price inflation in housing will do the Fed's bidding—taper down—anytime soon.

(With inputs from Reuters)

Jerome Powell, US Federal Reserve chair, maintains his hawkish stance on interest rate cuts despite falling inflation. Central bankers still foresee three interest-rate cuts before the end of 2024, but leaders are waiting and watching for more data to confirm inflation continues to slow.

Jerome Powell, US Federal Reserve chair, maintains his hawkish stance on interest rate cuts despite falling inflation. Central bankers still foresee three interest-rate cuts before the end of 2024, but leaders are waiting and watching for more data to confirm inflation continues to slow. Policymakers Monday stressed that they want to see proof that inflation is definitively on its way back to the Fed's target of 2 per cent before they ease off on borrowing costs. Here is a look at some of the key economic indicators the Fed is keeping a close eye on. Employment The economy created a healthy 303,000 jobs in February, above expectations. Payrolls for the prior two months were also revised higher. The jobless rate surprisingly fell to 3.8 per cent, the 26th consecutive month it has been below 4 per cent — the longest streak since the 1960s. Meanwhile, inflationary pressures remained muted as wages only rose 3.4 per cent on a year-over-year basis. Richmond Fed President Thomas Barkin said, "The data pointed to a 'quite strong jobs report'. The Fed appears increasingly confident that further job growth might not prevent inflation from falling lower, especially if labour supply increases and wage growth moderates. Both these factors occurred in March in the way that the Labour force developed at the fastest pace since August and annual wage growth softened to the lowest since June 2021. But wage growth remains above the 3.0 per cent-3.5 per cent range that most policymakers believe aligns with the Fed's 2 per cent inflation target. Available Positions The JOLTS is closely watched by none other than Federal Reserve Chair Jerome Powell, coming from the United States Department of Labour. The JOLTS is a measure of the labour supply-demand imbalance that indicates how many openings exist for every unemployed person actively looking for work. This ratio had been rapidly falling toward pre-pandemic levels; however, since October, it has consistently remained high within the range of 1.35 – 1.43, considered way above pre-pandemic levels of 1.2 to 1. February's figures were the latest available, and they showed that the ratio had decreased as the number of job seekers climbed, pushing up the jobless rate. Quits rate, another measure aside from the ones mentioned in JOLTS, has shown some returning to pre-pandemic levels. Inflation Fed follows the inflation measures set by the Personal Consumption Expenditures price index and also has a target rate using the same measure. The PCE index rose at a 2.5 per cent annual rate in February, up from 2.4 per cent in January. Core inflation, excluding volatile food and energy prices, rose at a 2.8 per cent rate, down slightly from the upwardly revised January figure of 2.9 per cent. Neither figure inspires strong confidence among Fed policymakers regarding a consistent decline in inflation towards their target. The Consumer Price Index data was also worrying. The CPI gained 3.2 per cent on year in February, topping forecasts and the 3.1 per cent rise the previous month. However, core CPI fell only a bit to 3.8 per cent from 3.9 per cent, excluding food and energy costs, a possible indicator that the Fed has a long fight with inflation ahead. Not having to factor in huge increases for gasoline, which accounted for over half the increase, and housing, which was a big contributor to overall expense increases, ups the CPI. It remains to be seen if asset-price inflation in housing will do the Fed's bidding—taper down—anytime soon. (With inputs from Reuters)

US Fed holds rates steady, waits for confirmation on inflation retreat

A group of large US banking giants on Friday announced intentions to boost their third-quarter dividends after satisfactorily passing the Federal Reserve's yearly stress test that tests whether banks have enough capital to survive severe economic and market turmoil.

JPMorgan Chase, the largest US lender, increased its dividend to $1.25 per share from $1.15, a regulatory filing showed. The board also authorised $30 billion in new share buybacks, effective July 1.

In addition, Bank of America announced a 26-cent dividend per share from 24 cents. Citigroup matched that by boosting its dividend to 56 cents per share from 53 cents, the banks said in separate filings.

"Banks are going to remain conservative on capital as uncertainty over the Basel proposal remains," Brian Mulberry, a client portfolio manager at Zacks Investment Management, said after the dividends were announced.

Morgan Stanley declared a dividend hike to 92.5 cents a share from 85 cents. Those plans were disclosed after banks passed the Fed's stress tests, meant to determine how much capital banks must hold before they can return money to shareholders.

Goldman Sachs, on its part, vowed to lift the dividend to $3 a share from $2.75.&nbsp;

Results from these stress tests dictate the size of each bank's stress capital buffer (SCB), a surcharge on capital that the Fed requires them to hold in order to weather potential economic storms.&nbsp;

Goldman expressed their puzzlement at the rise of their SCB.

"This increase does not seem to reflect the strategic evolution of our business and the continuous progress we’ve made to reduce our stress loss intensity," CEO David Solomon said in a statement.

Wells Fargo announced a 40-cent per share dividend hike.&nbsp;

This year's stress tests examined 31 large banks, versus 23 in the last one. The tests showed banks have enough capital to keep lending even if the country is struck by adverse conditions such as high unemployment, steep market volatility, and both residential and commercial mortgage markets decline.

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			<td data-sheets-value="{&quot;1&quot;:2,&quot;2&quot;:&quot;Bank of America&quot;}">Bank of America</td>
			<td data-sheets-value="{&quot;1&quot;:2,&quot;2&quot;:&quot;26 cents&quot;}" style="width: 196px;">26 cents</td>
			<td data-sheets-value="{&quot;1&quot;:2,&quot;2&quot;:&quot;24 cents&quot;}" style="width: 159px;">24 cents</td>
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			<td data-sheets-value="{&quot;1&quot;:2,&quot;2&quot;:&quot;Citigroup&quot;}">Citigroup</td>
			<td data-sheets-value="{&quot;1&quot;:2,&quot;2&quot;:&quot;56 cents&quot;}" style="width: 196px;">56 cents</td>
			<td data-sheets-value="{&quot;1&quot;:2,&quot;2&quot;:&quot;53 cents&quot;}" style="width: 159px;">53 cents</td>
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			<td data-sheets-value="{&quot;1&quot;:2,&quot;2&quot;:&quot;Wells Fargo&quot;}">Wells Fargo</td>
			<td data-sheets-value="{&quot;1&quot;:2,&quot;2&quot;:&quot;40 cents&quot;}" style="width: 196px;">40 cents</td>
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			<td data-sheets-value="{&quot;1&quot;:2,&quot;2&quot;:&quot;Goldman Sachs&quot;}">Goldman Sachs</td>
			<td data-sheets-numberformat="{&quot;1&quot;:4,&quot;2&quot;:&quot;\&quot;$\&quot;#,##0&quot;,&quot;3&quot;:1}" data-sheets-value="{&quot;1&quot;:3,&quot;3&quot;:3}" style="width: 196px;">$3</td>
			<td data-sheets-numberformat="{&quot;1&quot;:4,&quot;2&quot;:&quot;\&quot;$\&quot;#,##0.00&quot;,&quot;3&quot;:1}" data-sheets-value="{&quot;1&quot;:3,&quot;3&quot;:2.75}" style="width: 159px;">$2.75</td>
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			<td data-sheets-value="{&quot;1&quot;:2,&quot;2&quot;:&quot;Morgan Stanley&quot;}">Morgan Stanley</td>
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			<td data-sheets-value="{&quot;1&quot;:2,&quot;2&quot;:&quot;85 cents&quot;}" style="width: 159px;">85 cents</td>
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A group of large US banking giants on Friday announced intentions to boost their third-quarter dividends after satisfactorily passing the Federal Reserve's yearly stress test that tests whether banks have enough capital to survive severe economic and market turmoil.

A group of large US banking giants on Friday announced intentions to boost their third-quarter dividends after satisfactorily passing the Federal Reserve's yearly stress test that tests whether banks have enough capital to survive severe economic and market turmoil. JPMorgan Chase, the largest US lender, increased its dividend to $1.25 per share from $1.15, a regulatory filing showed. The board also authorised $30 billion in new share buybacks, effective July 1. In addition, Bank of America announced a 26-cent dividend per share from 24 cents. Citigroup matched that by boosting its dividend to 56 cents per share from 53 cents, the banks said in separate filings. "Banks are going to remain conservative on capital as uncertainty over the Basel proposal remains," Brian Mulberry, a client portfolio manager at Zacks Investment Management, said after the dividends were announced. Morgan Stanley declared a dividend hike to 92.5 cents a share from 85 cents. Those plans were disclosed after banks passed the Fed's stress tests, meant to determine how much capital banks must hold before they can return money to shareholders. Goldman Sachs, on its part, vowed to lift the dividend to $3 a share from $2.75. Results from these stress tests dictate the size of each bank's stress capital buffer (SCB), a surcharge on capital that the Fed requires them to hold in order to weather potential economic storms. Goldman expressed their puzzlement at the rise of their SCB. "This increase does not seem to reflect the strategic evolution of our business and the continuous progress we’ve made to reduce our stress loss intensity," CEO David Solomon said in a statement. Wells Fargo announced a 40-cent per share dividend hike. This year's stress tests examined 31 large banks, versus 23 in the last one. The tests showed banks have enough capital to keep lending even if the country is struck by adverse conditions such as high unemployment, steep market volatility, and both residential and commercial mortgage markets decline. Bank New Dividend (Per share) Old Dividend (Per share) JP Morgan $1.25 $1.15 Bank of America 26 cents 24 cents Citigroup 56 cents 53 cents Wells Fargo 40 cents 35 cents Goldman Sachs $3 $2.75 Morgan Stanley 92.5 cents 85 cents

US banking giants to hike dividends after passing Fed stress tests

All eyes are on the US Federal Reserve as it tracks economic data to decide on rate cuts. Now, a measure of prices tracked closely by the Fed suggests that inflation pressures in the economy are easing.

Data showed a flat growth of consumer prices for the month of in the last 2 months. This marks the mildest such performance in more than four years. Core inflation also registered slight improvements on the previous month's data.

While home sales &amp; factory activity remain a concern, a decline in consumer prices is welcome news for Fed policymakers, who have maintained interest rates in the 5.25-5.50 per cent range. Fed has been tracking inflation and expects it to fall within its target range before it starts cutting interest rates. Economists now anticipate rate-cut bets to start in September.

Fed has raised its benchmark rate 11 times in 2022 &amp; 2023 amid the worst streak of inflation in four decades. Still, average prices remain far above where they were before the pandemic. This is a major cause of concern for consumers and a potential issue in the upcoming elections.&nbsp;

Fed's preferred inflation gauge is the personal consumption expenditures price index, which tracks changes in how people shop when inflation jumps. For example, it can track when consumers switch from luxury goods to cheaper goods.

Despite easing prices, the overall economy continues to lag. The US economy expanded at a 1.4 per cent annual pace from January through March, the slowest growth since 2022. Consumer spending is also relatively stagnant.&nbsp;

All eyes are on the US Federal Reserve as it tracks economic data to decide on rate cuts. Now, a measure of prices tracked closely by the Fed suggests that inflation pressures in the economy are easing.

All eyes are on the US Federal Reserve as it tracks economic data to decide on rate cuts. Now, a measure of prices tracked closely by the Fed suggests that inflation pressures in the economy are easing. Data showed a flat growth of consumer prices for the month of in the last 2 months. This marks the mildest such performance in more than four years. Core inflation also registered slight improvements on the previous month's data. While home sales & factory activity remain a concern, a decline in consumer prices is welcome news for Fed policymakers, who have maintained interest rates in the 5.25-5.50 per cent range. Fed has been tracking inflation and expects it to fall within its target range before it starts cutting interest rates. Economists now anticipate rate-cut bets to start in September. Fed has raised its benchmark rate 11 times in 2022 & 2023 amid the worst streak of inflation in four decades. Still, average prices remain far above where they were before the pandemic. This is a major cause of concern for consumers and a potential issue in the upcoming elections. Fed's preferred inflation gauge is the personal consumption expenditures price index, which tracks changes in how people shop when inflation jumps. For example, it can track when consumers switch from luxury goods to cheaper goods. Despite easing prices, the overall economy continues to lag. The US economy expanded at a 1.4 per cent annual pace from January through March, the slowest growth since 2022. Consumer spending is also relatively stagnant.

Fed rate cuts in sight? Preferred inflation gauge shows price pressures easing

Now, we turn our attention to market moves this morning. Asian stocks tracked US peers higher as the federal reserve's cautious outlook on interest rates did little to alter wall street bulls. Cooling US inflation also swayed traders' sentiment.

Fed's hawkish tone offset by cooling US inflation

Investors will watch the Federal Reserve's meeting this week for clues on the central bank's view on rate cuts.

Broadly, the Fed is expected to keep policy rates on hold for a seventh consecutive meeting. However, there needs to be more certainty in officials' rate projections.

On Wednesday, US Fed officials will update their interest rate forecasts for the first time in three months, giving investors more information on the Fed's resolve to cut interest rates.

The central bank raised the benchmark federal funds rate by more than five percentage points starting in March 2022. Since July last year, they have kept the cost of borrowing at its highest level in twenty years.

Rate cuts anytime soon?

Over 40% of economists in a Bloomberg survey called the closely watched "dot plot" to show two rate cuts this year. A similar number of economists in the survey think it will show only one cut or none.

In the past few weeks, a host of Fed policymakers have said that they don't think it's necessary to cut rates right now.

The reason is that inflation is still high, and growth is expected to be strong.

However, since the previous Fed meeting, the latest growth indicators have consistently surprised to the downside, and inflation data have also met expectations.

The Fed's preferred measure of inflation was 2.7% in the year ended April, compared to the central bank's 2% target. Data released on Friday showed a surge in payrolls last month and accelerating wages, prompting traders to dial back expectations on rate cuts this year.

"Another very strong jobs report has cast further doubt on the prospect of interest rate cuts this year," said James Knightley, Chief International Economist at ING.

"In terms of what this means for the Fed next week - well, it confirms that the Fed will be pushing back rate cut projections from 3 cuts this year and 3 cuts next year to most probably 2 cuts this year and 4 next, but we can't rule them out saying just one for this year," added Knightley.

Growing divergence?

The Bank of Canada became the first G7 country to cut rates in this current cycle, followed by the European Central Bank.

While the ECB rate cut before the Fed is nothing short of historic, the real question is whether there is a growing monetary policy divergence or if this will only be a short-term situation.

The Fed is closing in on a rate cut, but more importantly, global inflation is still elevated, and it is at risk from the chaos in West Asia. The war on the edge of Europe is not helping either.

Will the BOC and the ECB be able to follow through with more rate cuts this year?

"The ECB's June decision was sewn up weeks ago and long before the past few weeks' less-than-helpful wage and inflation data releases. The Bank is visibly much more confident in the visions coming from its inflation crystal ball. But hindsight would say the ECB was too quick to lock in expectations for a rate cut this week. And judging from President Lagarde's words, it's a tactic she isn't keen to repeat as we go into the summer," said Carsten Brzeski, Global Head of Macro at ING.

"Markets are slowly taking notice. Investors seem less convinced about where the easing cycle goes from here," added Brzeski.

Major global central banks are miffed in making a mistake again after the high inflation is "transitory" narrative back in 2020.

The final leg of the inflation fight is taking longer than expected, with the Fed wanting to feel rock-solid in its outlook for price pressures to fall to its target.

Investors will watch the Federal Reserve's meeting this week for clues on the central bank's view on rate cuts. Broadly, the Fed is expected to keep policy rates on hold for a seventh consecutive meeting.

Investors will watch the Federal Reserve's meeting this week for clues on the central bank's view on rate cuts. Broadly, the Fed is expected to keep policy rates on hold for a seventh consecutive meeting. However, there needs to be more certainty in officials' rate projections. On Wednesday, US Fed officials will update their interest rate forecasts for the first time in three months, giving investors more information on the Fed's resolve to cut interest rates. The central bank raised the benchmark federal funds rate by more than five percentage points starting in March 2022. Since July last year, they have kept the cost of borrowing at its highest level in twenty years. Rate cuts anytime soon? Over 40% of economists in a Bloomberg survey called the closely watched "dot plot" to show two rate cuts this year. A similar number of economists in the survey think it will show only one cut or none. In the past few weeks, a host of Fed policymakers have said that they don't think it's necessary to cut rates right now. The reason is that inflation is still high, and growth is expected to be strong. However, since the previous Fed meeting, the latest growth indicators have consistently surprised to the downside, and inflation data have also met expectations. The Fed's preferred measure of inflation was 2.7% in the year ended April, compared to the central bank's 2% target. Data released on Friday showed a surge in payrolls last month and accelerating wages, prompting traders to dial back expectations on rate cuts this year. "Another very strong jobs report has cast further doubt on the prospect of interest rate cuts this year," said James Knightley, Chief International Economist at ING. "In terms of what this means for the Fed next week - well, it confirms that the Fed will be pushing back rate cut projections from 3 cuts this year and 3 cuts next year to most probably 2 cuts this year and 4 next, but we can't rule them out saying just one for this year," added Knightley. Growing divergence? The Bank of Canada became the first G7 country to cut rates in this current cycle, followed by the European Central Bank. While the ECB rate cut before the Fed is nothing short of historic, the real question is whether there is a growing monetary policy divergence or if this will only be a short-term situation. The Fed is closing in on a rate cut, but more importantly, global inflation is still elevated, and it is at risk from the chaos in West Asia. The war on the edge of Europe is not helping either. Will the BOC and the ECB be able to follow through with more rate cuts this year? "The ECB's June decision was sewn up weeks ago and long before the past few weeks' less-than-helpful wage and inflation data releases. The Bank is visibly much more confident in the visions coming from its inflation crystal ball. But hindsight would say the ECB was too quick to lock in expectations for a rate cut this week. And judging from President Lagarde's words, it's a tactic she isn't keen to repeat as we go into the summer," said Carsten Brzeski, Global Head of Macro at ING. "Markets are slowly taking notice. Investors seem less convinced about where the easing cycle goes from here," added Brzeski. Major global central banks are miffed in making a mistake again after the high inflation is "transitory" narrative back in 2020. The final leg of the inflation fight is taking longer than expected, with the Fed wanting to feel rock-solid in its outlook for price pressures to fall to its target.

All eyes on the Federal Reserve meeting

The growing divide between the haves and the have-nots is clearly visible in the United States. The Federal Reserve's indecision is not helping the cause. Watch in for more details!

Near-unprecedented pace of wealth creation in US stocks

US consumer prices increased less than expected in April, suggesting that inflation resumed its downward trend at the start of the second quarter in a boost to financial market expectations for a September interest rate cut.

US inflation resumes downward trend, boosts rate cut hopes

Federal Reserve Chair Jerome Powell said the US central bank needs to be patient as it awaits more evidence that high interest rates are curbing inflation, doubling-down on the need to keep borrowing costs elevated. Watch in for more details!

US Fed likely to keep rates higher for longer to curb inflation

The US Federal Reserve at its meeting on march 20 left the key lending rate unchanged, as was expected by the market. Following the announcement, all eyes were on the US Fed’s dot plot to look for signals on the next rate cut. This story explains what a dot plot is and why it's important now.

US Fed turns to dot plot graph to cut rates

2024 has largely defied economists' expectations. The world's largest economy has avoided a recession and is quite robust to gain momentum once the US Fed starts cutting interest rates. HSBC suggests investors rebalance their portfolios to capitalise on the economic shift. So, what are the opportunities and risks ahead in the markets? Our report tells us more.

HSBC sees strong growth in India & South-East Asia

Easing inflation optimism has traders increasing their bets that the US Central Bank will act on its pivot to rate cuts sooner than expected. The US inflation rate has been on a downward trend in recent months. That has fueled hopes the federal reserve would be more amenable to cutting interest rates in the months to come.

Fed rate cut bets rise on easing inflation optimism

A financial storm is brewing in the united states as the nation's total public debt shatters records, reaching $34 trillion. With congress returning to address looming deadlines, the fiscal battleground is set. The once incremental climb in debt now raises urgent questions about the nation's financial future.

US federal reserve releases minutes of December meeting | World DNA

Traders are betting that the Federal Reserve won't ease policy until may, as stronger-than-expected economic data and comments from central bankers diminish confidence in earlier interest-rate cuts.

US: Inflation concerns resurface

Benchmark equity indices Sensex and Nifty rallied over 1 per cent to hit all-time highs on Thursday, propelled by intense buying in IT, tech and realty stocks after the US Federal Reserve kept its key interest rate unchanged and signalled rate cuts next year.

Rising for the second straight session, the 30-share BSE Sensex jumped 929.60 points or 1.34 per cent to settle at 70,514.20, its all-time closing high. During the day, it surged 1,018.29 points or 1.46 per cent to hit its all-time intra-day peak of 70,602.89.

The Nifty rallied 256.35 points or 1.23 per cent to settle at a record closing high of 21,182.70. During the session, it jumped 284.55 points or 1.35 per cent to 21,210.90, its record intra-day peak.

Among the Sensex firms, Tech Mahindra, Infosys, Wipro, HCL Technologies, IndusInd Bank, Bajaj Finance, Bajaj Finserv and Mahindra &amp; Mahindra were the major gainers.

On the other hand, Power Grid, Nestle, JSW Steel, Maruti, Titan and Tata Motors were among the laggards.

In Asian markets, Seoul and Hong Kong settled in positive territory, while Tokyo and Shanghai ended lower.

European markets were trading in the green. The US markets ended with significant gains on Wednesday.

The Federal Reserve kept its key interest rate unchanged on Wednesday for a third straight time, a sign that it is likely done raising rates after having imposed the fastest string of increases in four decades to fight painfully high inflation.

Watch | Indian govt rejects OIC statement on Supreme Court upholding Article 370’s dilution

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The Fed's policymakers also signalled that they expect to make three quarter-point cuts to their benchmark interest rate next year.

"The market continued its exuberance and hit a fresh high amid the dovish commentary from the Federal Reserve, signalling at least three rate cuts in 2024. Further, the sharp fall in US bond yields improved investors’ confidence.

"An upgrade in India’s GDP forecast, ease in global oil prices, and the RBI decision to clamp down inflation to the target level led to a broad-based rally with outperformance from Realty and IT," said Vinod Nair, Head of Research at Geojit Financial Services.

Also Read | <a href="https://www.wionews.com/india-news/india-delhis-chilling-temperatures-making-air-quality-worse-as-aqi-remains-very-poor-669530">India: Delhi's chilling temperatures making air quality worse as AQI remains 'very poor'</a>

Foreign Institutional Investors (FIIs) continued to remain buyers as they bought equities worth Rs 4,710.86 crore on Wednesday, according to exchange data.

WATCH | <a href="https://www.wionews.com/india-news/watch-indian-army-rescues-over-800-stranded-tourists-from-sikkim-vacate-barracks-to-give-accomodation-669487">Indian Army rescues over 800 stranded tourists from Sikkim, vacates barracks to accommodate them</a>

Global oil benchmark Brent crude climbed 1.74 per cent to USD 75.55 a barrel.

The BSE benchmark advanced 33.57 points or 0.05 per cent to settle at 69,584.60 on Wednesday. The Nifty gained 19.95 points or 0.10 per cent to 20,926.35.

Benchmark equity indices Sensex and Nifty rallied over 1 per cent to hit all-time highs on Thursday, propelled by intense buying in IT, tech and realty stocks after the US Federal Reserve kept its key interest rate unchanged and signalled rate cuts next year.

Benchmark equity indices Sensex and Nifty rallied over 1 per cent to hit all-time highs on Thursday, propelled by intense buying in IT, tech and realty stocks after the US Federal Reserve kept its key interest rate unchanged and signalled rate cuts next year. Rising for the second straight session, the 30-share BSE Sensex jumped 929.60 points or 1.34 per cent to settle at 70,514.20, its all-time closing high. During the day, it surged 1,018.29 points or 1.46 per cent to hit its all-time intra-day peak of 70,602.89. The Nifty rallied 256.35 points or 1.23 per cent to settle at a record closing high of 21,182.70. During the session, it jumped 284.55 points or 1.35 per cent to 21,210.90, its record intra-day peak. Among the Sensex firms, Tech Mahindra, Infosys, Wipro, HCL Technologies, IndusInd Bank, Bajaj Finance, Bajaj Finserv and Mahindra & Mahindra were the major gainers. On the other hand, Power Grid, Nestle, JSW Steel, Maruti, Titan and Tata Motors were among the laggards. In Asian markets, Seoul and Hong Kong settled in positive territory, while Tokyo and Shanghai ended lower. European markets were trading in the green. The US markets ended with significant gains on Wednesday. The Federal Reserve kept its key interest rate unchanged on Wednesday for a third straight time, a sign that it is likely done raising rates after having imposed the fastest string of increases in four decades to fight painfully high inflation. Watch | Indian govt rejects OIC statement on Supreme Court upholding Article 370’s dilution × The Fed's policymakers also signalled that they expect to make three quarter-point cuts to their benchmark interest rate next year. "The market continued its exuberance and hit a fresh high amid the dovish commentary from the Federal Reserve, signalling at least three rate cuts in 2024. Further, the sharp fall in US bond yields improved investors’ confidence. "An upgrade in India’s GDP forecast, ease in global oil prices, and the RBI decision to clamp down inflation to the target level led to a broad-based rally with outperformance from Realty and IT," said Vinod Nair, Head of Research at Geojit Financial Services. Also Read | India: Delhi's chilling temperatures making air quality worse as AQI remains 'very poor' Foreign Institutional Investors (FIIs) continued to remain buyers as they bought equities worth Rs 4,710.86 crore on Wednesday, according to exchange data. WATCH | Indian Army rescues over 800 stranded tourists from Sikkim, vacates barracks to accommodate them Global oil benchmark Brent crude climbed 1.74 per cent to USD 75.55 a barrel. The BSE benchmark advanced 33.57 points or 0.05 per cent to settle at 69,584.60 on Wednesday. The Nifty gained 19.95 points or 0.10 per cent to 20,926.35.

Sensex, Nifty rally over 1 pc to hit lifetime highs as US Fed ignites rate cut hopes

In a recent development, Bitcoin has skyrocketed beyond $41,000, marking its highest point since April 2022. According to a report by the Associated Press, this surge represents a staggering 150 per cent increase in value for the world's largest cryptocurrency in just the first half of the year. <o:p></o:p>

According to FactSet, Bitcoin's journey has been volatile, initially leaping from $5,000 during the pandemic to nearly $68,000 in November 2021, followed by a significant dip due to Federal Reserve rate hikes and the collapse of crypto giant FTX.<o:p></o:p>

2023: A year of recovery<o:p></o:p>

As 2023 began, Bitcoin experienced a setback, with a single unit trading for less than $17,000 after losing more than 75 per cent of its value. However, investor confidence returned as inflation cooled, and the collapse of tech-focused banks led many to explore crypto investments amid an environment of market uncertainty.<o:p></o:p>

Spot ETFs: The driving force<o:p></o:p>

The current rally in Bitcoin prices is attributed to the growing optimism surrounding the potential approval of spot Bitcoin exchange-traded funds (ETFs). This new investment avenue, allowing investors to buy and sell Bitcoin at spot prices rather than futures, is seen as a game-changer. <o:p></o:p>

Analysts suggest that this could democratise crypto investments, making it more accessible to a broader audience while mitigating some of the inherent risks associated with cryptocurrency investments. Recent successes by crypto fund managers have improved the odds of regulatory approval, potentially occurring as early as next month.<o:p></o:p>

Mixed predictions for the future<o:p></o:p>

The Associated Press cited Kaiko research analyst Riyad Carey, who emphasised that while the approval of spot Bitcoin ETFs could attract a larger pool of investors, the impact on future volumes remains uncertain. This development could either significantly boost or potentially undermine Bitcoin's value, adding an element of unpredictability to the current market dynamics.<o:p></o:p>

Binance's setback and continued operation<o:p></o:p>

Amidst Bitcoin's rally, the cryptocurrency market faced disruptions, notably with the U.S. government imposing a $4 billion fine on Binance, the world's largest crypto exchange. Founder Changpeng Zhao pleaded guilty to a felony charge, yet Binance continues to operate, maintaining its market share. Analysts argue that the settlement, while a setback, removed a significant overhang, contributing to Bitcoin's gains in the weeks following the announcement.<o:p></o:p>

Caution amidst excitement<o:p></o:p>

Despite the recent enthusiasm surrounding Bitcoin, experts caution that cryptocurrencies remain a risky venture with unpredictable fluctuations. The collapse of FTX in the previous year left a lasting impact on public confidence, particularly among retail investors. <o:p></o:p>

Edward Moya, a former senior market analyst at Oanda, highlighted that institutional money, such as hedge funds, currently dominates the crypto investing landscape. Additionally, Carey pointed out that liquidity in cryptocurrency markets is yet to fully recover from the FTX collapse, potentially amplifying price fluctuations.<o:p></o:p>

Market snapshot<o:p></o:p>

As of 1:30 p.m. Eastern time on Monday, Bitcoin was valued at $41,709. While Bitcoin steals the spotlight, other cryptocurrencies have seen varied performances. Ethereum stood at $2,223, reflecting an 85 per cent increase since the beginning of 2023. In contrast, Binance Coin and Dash experienced declines of 5.25 per cent and 24.37 per cent, with Monday afternoon prices at around $231 and $32, respectively.<o:p></o:p>

(With inputs from the Associated Press)<o:p></o:p>

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In a recent development, Bitcoin has skyrocketed beyond $41,000, marking its highest point since April 2022. According to a report by the Associated Press, this surge represents a staggering 150 per cent increase in value for the world's largest cryptocurrency in just the first half of the year.

In a recent development, Bitcoin has skyrocketed beyond $41,000, marking its highest point since April 2022. According to a report by the Associated Press, this surge represents a staggering 150 per cent increase in value for the world's largest cryptocurrency in just the first half of the year. According to FactSet, Bitcoin's journey has been volatile, initially leaping from $5,000 during the pandemic to nearly $68,000 in November 2021, followed by a significant dip due to Federal Reserve rate hikes and the collapse of crypto giant FTX. 2023: A year of recovery As 2023 began, Bitcoin experienced a setback, with a single unit trading for less than $17,000 after losing more than 75 per cent of its value. However, investor confidence returned as inflation cooled, and the collapse of tech-focused banks led many to explore crypto investments amid an environment of market uncertainty. Spot ETFs: The driving force The current rally in Bitcoin prices is attributed to the growing optimism surrounding the potential approval of spot Bitcoin exchange-traded funds (ETFs). This new investment avenue, allowing investors to buy and sell Bitcoin at spot prices rather than futures, is seen as a game-changer. Analysts suggest that this could democratise crypto investments, making it more accessible to a broader audience while mitigating some of the inherent risks associated with cryptocurrency investments. Recent successes by crypto fund managers have improved the odds of regulatory approval, potentially occurring as early as next month. Mixed predictions for the future The Associated Press cited Kaiko research analyst Riyad Carey, who emphasised that while the approval of spot Bitcoin ETFs could attract a larger pool of investors, the impact on future volumes remains uncertain. This development could either significantly boost or potentially undermine Bitcoin's value, adding an element of unpredictability to the current market dynamics. Binance's setback and continued operation Amidst Bitcoin's rally, the cryptocurrency market faced disruptions, notably with the U.S. government imposing a $4 billion fine on Binance, the world's largest crypto exchange. Founder Changpeng Zhao pleaded guilty to a felony charge, yet Binance continues to operate, maintaining its market share. Analysts argue that the settlement, while a setback, removed a significant overhang, contributing to Bitcoin's gains in the weeks following the announcement. Caution amidst excitement Despite the recent enthusiasm surrounding Bitcoin, experts caution that cryptocurrencies remain a risky venture with unpredictable fluctuations. The collapse of FTX in the previous year left a lasting impact on public confidence, particularly among retail investors. Edward Moya, a former senior market analyst at Oanda, highlighted that institutional money, such as hedge funds, currently dominates the crypto investing landscape. Additionally, Carey pointed out that liquidity in cryptocurrency markets is yet to fully recover from the FTX collapse, potentially amplifying price fluctuations. Market snapshot As of 1:30 p.m. Eastern time on Monday, Bitcoin was valued at $41,709. While Bitcoin steals the spotlight, other cryptocurrencies have seen varied performances. Ethereum stood at $2,223, reflecting an 85 per cent increase since the beginning of 2023. In contrast, Binance Coin and Dash experienced declines of 5.25 per cent and 24.37 per cent, with Monday afternoon prices at around $231 and $32, respectively. (With inputs from the Associated Press) WATCH WION LIVE HERE

Bitcoin surges past $41,000: Spot ETF approval and market dynamics drive the rally

The US Federal Reserve is moving decisively away from ultra-aggressive tightening policy into a wait-and-watch mode, with the latest language from the policymakers suggesting a clear caution in their tone.

From behind the curve in 2021, when the Fed called the surge in inflation as 'transitory' to 'more rate hikes needed' as recent as last month, the journey of the US central bank mirrors the global policy path over the last two years.

With inflation showing clear signs of easing, the Fed looks to take its pedal off the accelerator.

History, perception &amp; expectations

Historically, a rate-hike cycle follows a short pause in the policy path before interest rates are cut.

But, this is where experts are divided.

While one section of economists and analysts expect policy to stay on hold until the second half of next year, an equal number of them predict the central bank will bring its knife out in the April-June quarter.

The reason for the divide is inflation expectations.

Easing inflation calls for a pause in rate hikes, but the triggers of elevated price pressures over the past year are still at play.

Geopolitics-driven disruption to global supply chains, rising cost of living and no signs of international crude prices cooling anytime soon.

So, with the recipe for inflation surge still intact, the question of central banks 'behind the curve' narrative gains traction.

Damned if they do, damned if they don't

Global central banks have had a tough balancing act over the past two years - managing surging price pressures and slowing economic activity simultaneously.

While what they have done is commendable at a time when external factors, including the Russia-Ukraine war, influenced policy decisions, the real question is: Are central banks responding after the events rather than being proactive?

Broadly - the expectations now point to an end to rate-hike cycles, with most major central banks predicted to move into a pause mode.

Bets are also piling up for rate cuts in 2024, but the hesitation and uncertainty reflect past mistakes.

Will the beginning of 2024 be a decisive moment to welcome a shift in policy path, or will we have more of the same?

Households would hope central bank policies support their purses, and businesses would want their borrowing costs lowered.

The next phase of the monetary cycle is filled with the same sentiment - dilemma.

The US Federal Reserve is moving decisively away from ultra-aggressive tightening policy into a wait-and-watch mode, with the latest language from the policymakers suggesting a clear caution in their tone.

The US Federal Reserve is moving decisively away from ultra-aggressive tightening policy into a wait-and-watch mode, with the latest language from the policymakers suggesting a clear caution in their tone. From behind the curve in 2021, when the Fed called the surge in inflation as 'transitory' to 'more rate hikes needed' as recent as last month, the journey of the US central bank mirrors the global policy path over the last two years. With inflation showing clear signs of easing, the Fed looks to take its pedal off the accelerator. History, perception & expectations Historically, a rate-hike cycle follows a short pause in the policy path before interest rates are cut. But, this is where experts are divided. While one section of economists and analysts expect policy to stay on hold until the second half of next year, an equal number of them predict the central bank will bring its knife out in the April-June quarter. The reason for the divide is inflation expectations. Easing inflation calls for a pause in rate hikes, but the triggers of elevated price pressures over the past year are still at play. Geopolitics-driven disruption to global supply chains, rising cost of living and no signs of international crude prices cooling anytime soon. So, with the recipe for inflation surge still intact, the question of central banks 'behind the curve' narrative gains traction. Damned if they do, damned if they don't Global central banks have had a tough balancing act over the past two years - managing surging price pressures and slowing economic activity simultaneously. While what they have done is commendable at a time when external factors, including the Russia-Ukraine war, influenced policy decisions, the real question is: Are central banks responding after the events rather than being proactive? Broadly - the expectations now point to an end to rate-hike cycles, with most major central banks predicted to move into a pause mode. Bets are also piling up for rate cuts in 2024, but the hesitation and uncertainty reflect past mistakes. Will the beginning of 2024 be a decisive moment to welcome a shift in policy path, or will we have more of the same? Households would hope central bank policies support their purses, and businesses would want their borrowing costs lowered. The next phase of the monetary cycle is filled with the same sentiment - dilemma.

What next: US Federal Reserve on the cusp of policy change

Asian stock markets surged following the Federal Reserve's recent decision, mirroring the upward trajectory of U.S. equities and bonds. The Federal Reserve's indication that it might conclude its policy tightening cycle was met with optimism by investors.

Japanese, Hong Kong, and South Korean stocks all opened with gains, while mainland Chinese stocks started the day with a relatively stable performance.

On Wall Street, the S&amp;P 500 witnessed a robust rally, climbing by over 1%, positioning the leading U.S. benchmark for its most impressive weekly performance since March. Notably, the tech-heavy Nasdaq 100 outperformed other U.S. indices.

The decline in Treasury yields had a dampening effect on the U.S. dollar, causing it to weaken against major currencies and providing support for the Japanese yen, which continued to strengthen during early trading, extending its gains from the previous day.

Federal Reserve Chair Jerome Powell, in the central bank's decision, left the possibility of future interest rate hikes open. However, he also highlighted the considerable tightening of financial conditions in recent months, partly due to higher long-term bond yields and other contributing factors.

In the energy market, U.S. crude oil prices surged by over 1% at the market open, partly due to supply concerns arising from the ongoing conflict in Israel and Gaza. The Federal Reserve's decision to maintain its current stance also contributed to the oil price rally since any substantial increase in interest rates could potentially slow down the global economy, affecting oil demand.

The Federal Reserve's unchanged stance had a positive impact on non-yielding assets like gold. This is because higher interest rates would diminish the opportunity cost of holding precious metals.

The cryptocurrency markets also responded positively to the Federal Reserve's decision. Following Jerome Powell's public address, Bitcoin witnessed a notable increase of over 3%. Major alternative cryptocurrencies, including Ethereum and Ripple, followed suit with gains that mirrored Bitcoin's performance.&nbsp;

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Asian stock markets surged following the Federal Reserve's recent decision, mirroring the upward trajectory of U.S. equities and bonds. The Federal Reserve's indication that it might conclude its policy tightening cycle was met with optimism by investors.

Asian stock markets surged following the Federal Reserve's recent decision, mirroring the upward trajectory of U.S. equities and bonds. The Federal Reserve's indication that it might conclude its policy tightening cycle was met with optimism by investors. Japanese, Hong Kong, and South Korean stocks all opened with gains, while mainland Chinese stocks started the day with a relatively stable performance. On Wall Street, the S&P 500 witnessed a robust rally, climbing by over 1%, positioning the leading U.S. benchmark for its most impressive weekly performance since March. Notably, the tech-heavy Nasdaq 100 outperformed other U.S. indices. The decline in Treasury yields had a dampening effect on the U.S. dollar, causing it to weaken against major currencies and providing support for the Japanese yen, which continued to strengthen during early trading, extending its gains from the previous day. Federal Reserve Chair Jerome Powell, in the central bank's decision, left the possibility of future interest rate hikes open. However, he also highlighted the considerable tightening of financial conditions in recent months, partly due to higher long-term bond yields and other contributing factors. In the energy market, U.S. crude oil prices surged by over 1% at the market open, partly due to supply concerns arising from the ongoing conflict in Israel and Gaza. The Federal Reserve's decision to maintain its current stance also contributed to the oil price rally since any substantial increase in interest rates could potentially slow down the global economy, affecting oil demand. The Federal Reserve's unchanged stance had a positive impact on non-yielding assets like gold. This is because higher interest rates would diminish the opportunity cost of holding precious metals. The cryptocurrency markets also responded positively to the Federal Reserve's decision. Following Jerome Powell's public address, Bitcoin witnessed a notable increase of over 3%. Major alternative cryptocurrencies, including Ethereum and Ripple, followed suit with gains that mirrored Bitcoin's performance. WATCH WION LIVE HERE

Global Markets Roundup | Asian markets rally after U.S. Fed's monetary policy decision

Asian stock markets kicked off the day with a positive note, opening in the green, while U.S. stocks faced losses for the third consecutive month. Oil prices made a marginal climb, and the price of gold dropped below $2,000 per ounce. These market dynamics set the stage for a day filled with economic activity and events to watch closely.

One of the key cues to keep an eye on today is the U.S. Federal Reserve's policy decision. The Federal Reserve is concluding its two-day monetary policy meeting, and the prevailing expectation in the markets is that the central bank will maintain the status quo by keeping interest rates unchanged.

In the Asian markets, Japan's Nikkei 225 Index opened with a significant rise of over 2 per cent, indicating strong early trading activity. South Korea's KOSPI also opened nearly 1 per cent higher. In contrast, Hong Kong and mainland Chinese stocks opened relatively flat.

In the U.S., the situation is a bit different. U.S. stocks closed higher on Tuesday, regaining some lost ground after a challenging month. However, it's important to note that U.S. stocks posted losses for the third straight month, which is a concerning trend in the financial markets.

The oil market saw a slight uptick in prices during early Asian trading hours. This increase comes as the market closely monitors the latest developments in the Israel-Hamas conflict. It's essential to remember that the trajectory of interest rates plays a critical role in the oil market. Interest rate hikes, aimed at curbing inflation, have the potential to slow down economic growth and reduce oil demand. Conversely, rate cuts, which are intended to stimulate spending, could increase oil consumption.

Meanwhile, the price of gold witnessed a decline, falling below the $2,000 per ounce mark. This drop followed a significant rally of over 8 per cent in the previous week. The primary reason for this decline is the anticipation of higher interest rates for a more extended period, which is impacting the demand for non-yielding assets like gold. Additionally, the strengthening U.S. dollar is contributing to the downward pressure on gold prices.

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Asian stock markets kicked off the day with a positive note, opening in the green, while U.S. stocks faced losses for the third consecutive month. Oil prices made a marginal climb, and the price of gold dropped below $2,000 per ounce.

Asian stock markets kicked off the day with a positive note, opening in the green, while U.S. stocks faced losses for the third consecutive month. Oil prices made a marginal climb, and the price of gold dropped below $2,000 per ounce. These market dynamics set the stage for a day filled with economic activity and events to watch closely. One of the key cues to keep an eye on today is the U.S. Federal Reserve's policy decision. The Federal Reserve is concluding its two-day monetary policy meeting, and the prevailing expectation in the markets is that the central bank will maintain the status quo by keeping interest rates unchanged. In the Asian markets, Japan's Nikkei 225 Index opened with a significant rise of over 2 per cent, indicating strong early trading activity. South Korea's KOSPI also opened nearly 1 per cent higher. In contrast, Hong Kong and mainland Chinese stocks opened relatively flat. In the U.S., the situation is a bit different. U.S. stocks closed higher on Tuesday, regaining some lost ground after a challenging month. However, it's important to note that U.S. stocks posted losses for the third straight month, which is a concerning trend in the financial markets. The oil market saw a slight uptick in prices during early Asian trading hours. This increase comes as the market closely monitors the latest developments in the Israel-Hamas conflict. It's essential to remember that the trajectory of interest rates plays a critical role in the oil market. Interest rate hikes, aimed at curbing inflation, have the potential to slow down economic growth and reduce oil demand. Conversely, rate cuts, which are intended to stimulate spending, could increase oil consumption. Meanwhile, the price of gold witnessed a decline, falling below the $2,000 per ounce mark. This drop followed a significant rally of over 8 per cent in the previous week. The primary reason for this decline is the anticipation of higher interest rates for a more extended period, which is impacting the demand for non-yielding assets like gold. Additionally, the strengthening U.S. dollar is contributing to the downward pressure on gold prices. WATCH WION LIVE HERE

Global Markets Roundup | Markets await US Fed's monetary policy decision today

The European Central Bank (ECB) made a significant move by raising its key interest rate to a record high of 4 per cent on Thursday. However, in light of the economic struggles faced by the euro zone, the ECB signalled that this rate hike, which marked the 10th increase in a 14-month battle against inflation, is likely to be its last.

The ECB, which oversees monetary policy for the 20 countries sharing the euro, also revised its inflation and economic growth forecasts. It now anticipates that inflation will decrease more slowly towards its 2 per cent target over the next two years while revising downward its growth projections.

This present situation indicates the challenges faced by ECB policymakers as inflation rates continue to exceed the target rate, yet high borrowing costs and economic difficulties in China are hampering overall economic activity.

Consequently, the ECB sent a strong signal that its interest rate hikes have likely come to an end. This prompted a drop in euro zone bond yields and the euro’s value, while European shares gained as investors speculated that rate cuts might be on the horizon in the coming year.

Reuters quoted a statement made by the ECB saying, “Based on its current assessment, the Governing Council considers that the key ECB interest rates have reached levels that, maintained for a sufficiently long duration, will make a substantial contribution to the timely return of inflation to the target.”

However, this return to target inflation is now expected to occur at a slower pace than previously projected. The ECB’s previous forecasts suggest inflation rates of 5.6 per cent in 2023, 3.2 per cent in 2024, and 2.1 per cent in 2025.

The 25-basis-point interest rate hike pushed the rate that the ECB pays on bank deposits to 4 per cent, marking the highest level since the launch of the euro currency in 1999. When the ECB began to strictly control its monetary policy in July 2022, this rate came to reach a low of minus 0.5 per cent, indicating that banks had to pay to keep their funds safe with the central bank.

ECB President Christine Lagarde did not entirely dismiss the possibility of continued rate hikes, emphasising that interest rates would need to stay at restrictive levels for a while. Reuters quoted her at a press conference as saying, “The focus is going to move, going forwards, to the duration, but that is not to say, because we can't say that now, that we are at peak.”

Nevertheless, market reactions and forecasts have indicated scepticism about the ECB's commitment to keeping borrowing costs high for an extended period. Traders now anticipate the possibility of a rate cut as early as June, up from expectations of a cut in September prior to Thursday’s decision, which shall follow two more rate cuts anticipated at the end of 2024.

The lower market rates following the hike raise questions about the ECB’s determination to maintain elevated borrowing costs. Frederik Ducrozet, head of macroeconomic research at Pictet Wealth Management, commented, “The ECB won't be happy about this.”

While the ECB’s decision is being closely watched, the U.S. Federal Reserve is widely expected to stick to the same rates at its upcoming policy meeting. In contrast, the Bank of England is expected to proceed with a rate hike, despite some adjustments in expectations following the ECB's decision.

Responding to questions about whether the ECB's downgrade of its growth forecasts implied a regional recession as the base-case scenario, Lagarde maintained that the slowdown was temporary, expressing confidence that growth would rebound in 2024.

The ECB's adjustment of its 2024 inflation estimate played a role in the discussions, highlighting concerns that inflation, currently above 5 per cent, might remain at elevated levels for an extended period.

(With inputs from Reuters)

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The European Central Bank (ECB) made a significant move by raising its key interest rate to a record high of 4 per cent on Thursday. However, in light of the economic struggles faced by the euro zone, the ECB signalled that this rate hike, which marked the 10th increase in a 14-month battle against inflation, is likely to be its last.

The European Central Bank (ECB) made a significant move by raising its key interest rate to a record high of 4 per cent on Thursday. However, in light of the economic struggles faced by the euro zone, the ECB signalled that this rate hike, which marked the 10th increase in a 14-month battle against inflation, is likely to be its last. The ECB, which oversees monetary policy for the 20 countries sharing the euro, also revised its inflation and economic growth forecasts. It now anticipates that inflation will decrease more slowly towards its 2 per cent target over the next two years while revising downward its growth projections. This present situation indicates the challenges faced by ECB policymakers as inflation rates continue to exceed the target rate, yet high borrowing costs and economic difficulties in China are hampering overall economic activity. Consequently, the ECB sent a strong signal that its interest rate hikes have likely come to an end. This prompted a drop in euro zone bond yields and the euro’s value, while European shares gained as investors speculated that rate cuts might be on the horizon in the coming year. Reuters quoted a statement made by the ECB saying, “Based on its current assessment, the Governing Council considers that the key ECB interest rates have reached levels that, maintained for a sufficiently long duration, will make a substantial contribution to the timely return of inflation to the target.” However, this return to target inflation is now expected to occur at a slower pace than previously projected. The ECB’s previous forecasts suggest inflation rates of 5.6 per cent in 2023, 3.2 per cent in 2024, and 2.1 per cent in 2025. The 25-basis-point interest rate hike pushed the rate that the ECB pays on bank deposits to 4 per cent, marking the highest level since the launch of the euro currency in 1999. When the ECB began to strictly control its monetary policy in July 2022, this rate came to reach a low of minus 0.5 per cent, indicating that banks had to pay to keep their funds safe with the central bank. ECB President Christine Lagarde did not entirely dismiss the possibility of continued rate hikes, emphasising that interest rates would need to stay at restrictive levels for a while. Reuters quoted her at a press conference as saying, “The focus is going to move, going forwards, to the duration, but that is not to say, because we can't say that now, that we are at peak.” Nevertheless, market reactions and forecasts have indicated scepticism about the ECB's commitment to keeping borrowing costs high for an extended period. Traders now anticipate the possibility of a rate cut as early as June, up from expectations of a cut in September prior to Thursday’s decision, which shall follow two more rate cuts anticipated at the end of 2024. The lower market rates following the hike raise questions about the ECB’s determination to maintain elevated borrowing costs. Frederik Ducrozet, head of macroeconomic research at Pictet Wealth Management, commented, “The ECB won't be happy about this.” While the ECB’s decision is being closely watched, the U.S. Federal Reserve is widely expected to stick to the same rates at its upcoming policy meeting. In contrast, the Bank of England is expected to proceed with a rate hike, despite some adjustments in expectations following the ECB's decision. Responding to questions about whether the ECB's downgrade of its growth forecasts implied a regional recession as the base-case scenario, Lagarde maintained that the slowdown was temporary, expressing confidence that growth would rebound in 2024. The ECB's adjustment of its 2024 inflation estimate played a role in the discussions, highlighting concerns that inflation, currently above 5 per cent, might remain at elevated levels for an extended period. (With inputs from Reuters) WATCH WION LIVE HERE

European Central Bank raises interest rates to record high amid economic challenges

This is a move which will have a long term impact on the economy - the US Fed has raised its interest rates by 0.25% points to 5.5% and that is the highest interest levels in the last 22 years.

US Fed resumes rate hikes, hints at hike in September | World News | WION

Just ahead of a possible interest rate hike by the US fed, the world's largest economy has seen a two-year-high in consumer confidence. As per the conference board, a business research group, consumer confidence index rose to 117 in July from 110.1 in June. This was the highest since July 2021.

Consumer confidence at its highest since July 2021

Sales of new U.S. single-family homes surged to the highest level in nearly 1-1/2 years in May, benefiting from a dearth of previously owned homes available for sale. 
New home sales jumped 12.2 per cent to a seasonally adjusted annual rate of 763,000 units last month, the highest level since February 2022, the Commerce Department said on Tuesday.

April's sales pace was revised down to 680,000 units from 
the previously reported 683,000. Economists polled by Reuters had forecast new home sales, which account for a small share of U.S. home sales, slipping to a rate of 675,000 units.

Sales shot up 20 per cent on a year-on-year basis in May. New home sales are counted at the signing of a contract, making them a leading indicator of the housing market. They, however, can be volatile on a month-to-month basis.&nbsp;

The housing market has likely found a floor and could be even improving. Data last week showed homebuilder confidence rising into positive territory in June for the first time in 11 months. Housing starts surged in May as supply remains tight, while home resales edged up.&nbsp;

Economists say the signs of revival in the housing market suggested the Federal Reserve would need to keep raising interest rates. The housing market has been the biggest causality of the US central bank's fastest rate hiking cycle since the 1980s. The Fed, which has raised its policy rate by 500 basis points since March 2022, has signalled two more rate increases this year to cool demand in the overall economy.

<a href="https://www.wionews.com/business-economy/is-trouble-brewing-in-the-us-housing-markets-565042">Also read |&nbsp;Is trouble brewing in the US housing markets?</a>

The increase in sales last month was despite mortgage rates resuming their upward trend. The average rate on the popular 30-year fixed mortgage was higher in May relative to April, rising to 6.57 per cent by the last week of the month, according to data from mortgage finance agency Freddie Mac. New home sales posted double-digit growth in the Northeast, South and West. They rose 4.1 per cent in the Midwest.

The median new house price in May was $416,300, a 7.6 per cent drop from a year ago. There were 428,000 new homes on the market at the end of last month, down from 432,000 in April. At May's sales pace, it would take 6.7 months to clear the supply of houses on the market, down from 7.6 months in April.

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Sales of new U.S. single-family homes surged to the highest level in nearly 1-1/2 years in May, benefiting from a dearth of previously owned homes available for sale.

Sales of new U.S. single-family homes surged to the highest level in nearly 1-1/2 years in May, benefiting from a dearth of previously owned homes available for sale. New home sales jumped 12.2 per cent to a seasonally adjusted annual rate of 763,000 units last month, the highest level since February 2022, the Commerce Department said on Tuesday. April's sales pace was revised down to 680,000 units from the previously reported 683,000. Economists polled by Reuters had forecast new home sales, which account for a small share of U.S. home sales, slipping to a rate of 675,000 units. Sales shot up 20 per cent on a year-on-year basis in May. New home sales are counted at the signing of a contract, making them a leading indicator of the housing market. They, however, can be volatile on a month-to-month basis. The housing market has likely found a floor and could be even improving. Data last week showed homebuilder confidence rising into positive territory in June for the first time in 11 months. Housing starts surged in May as supply remains tight, while home resales edged up. Economists say the signs of revival in the housing market suggested the Federal Reserve would need to keep raising interest rates. The housing market has been the biggest causality of the US central bank's fastest rate hiking cycle since the 1980s. The Fed, which has raised its policy rate by 500 basis points since March 2022, has signalled two more rate increases this year to cool demand in the overall economy. Also read | Is trouble brewing in the US housing markets? The increase in sales last month was despite mortgage rates resuming their upward trend. The average rate on the popular 30-year fixed mortgage was higher in May relative to April, rising to 6.57 per cent by the last week of the month, according to data from mortgage finance agency Freddie Mac. New home sales posted double-digit growth in the Northeast, South and West. They rose 4.1 per cent in the Midwest. The median new house price in May was $416,300, a 7.6 per cent drop from a year ago. There were 428,000 new homes on the market at the end of last month, down from 432,000 in April. At May's sales pace, it would take 6.7 months to clear the supply of houses on the market, down from 7.6 months in April. WATCH WION LIVE HERE:

US new home sales jump in May; median house price falls

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