Closing Bell 21th September: Federal Reserve’s Stance Concerns Wall Street Analysts

Federal Reserve’s Decision

The US Federal Reserve has decided to maintain its current interest rates. Despite this, the possibility of future rate hikes has not been ruled out. Jerome Powell, the Fed chairman, emphasized the central bank’s commitment to managing inflation and growth without causing a recession. Various economists and strategists have shared their perspectives. Some believe the Fed has transitioned from a “hawkish pause” to a “patient pause,” while others anticipate a turbulent market end for 2023. The consensus is divided on whether more rate hikes are needed this year, with some expecting the Fed to ease by next year.

US Oil Reserves Deplete, Signaling Market Strain

Oil markets in the US are indicating a tightening scenario as stockpiles in Cushing, Oklahoma, a major storage hub, are nearing critical levels. After six consecutive weeks of decline, the inventories are close to the lowest seasonal level in five years. This drop has been attributed to a Keystone pipeline outage in September. As the stockpiles decrease, the delivery of crude becomes more challenging, leading traders to pay a premium for immediate delivery. Fuel oil prices also show signs of restricted supplies, with gasoline and diesel prices nearing seasonal highs.

Bank of England’s Rate Hike Decision in Balance After Inflation Dip

The Bank of England (BoE) is deliberating on whether to halt its streak of 14 consecutive interest rate hikes. Despite the anticipation of another quarter-point increase this year, a recent decline in inflation has cast doubts on this move. The market now sees a 50% probability of rates remaining unchanged, marking the first pause in the monetary tightening that began in late 2021. This potential pause mirrors the US Federal Reserve’s recent decision to keep its base rate unchanged.