Money News Overview Friday 22nd September 2023

US Consumer Confidence Rises as UK Inflation Concerns Persist

Yesterday, Risk appetite declined as we processed the hawkish hold by the Fed on Wednesday. While the Fed did maintain its policy, changes to the interest rate dotplot indicate that the consensus expectation is still for one more rate hike this year.

Market pricing had suggested that the Bank of England would raise interest rates by 25 basis points. However, the decision to hold rates was a close call, with five MPC members opting for no change and four voting to increase rates by 25 basis points.

In the meantime, the Bank of England emphasized that if inflation persists, there may be a need for further tightening of monetary policy. The market’s reaction to the BoE’s policy decision resulted in a sharp fall in the value of sterling, although the pound recovered somewhat before the end of the day.

Today, the flash PMIs for September in the United States, the Eurozone, and the United Kingdom will be the key releases to watch out for. These reports will provide important insights into the economic activity and sentiment in these regions.