Posted on September 21, 2022 We are kicking off a crucial week full of central bank meetings. The most important will be that of the FED, from which the third consecutive increase of 75 bp is probably expected on Wednesday, thus taking the official rate to a range of 3-3.25%. The market discounts a 20% probability that this increase will be 100 bps, and not 75 bps, as a result of the surprise in last week’s inflation data. Economists believe that the Federal Reserve will keep interest rates above 4%, beyond 2023. The strong flattening in the curve reflects a more aggressive rate hike policy, as the inversion of the 2-10yr tranche deepens, which stands at 50 bps. As for the BoE, the delay due to the death of Isabel II has meant that this week the central bank can include in the equation the inflation data that we learned last week, which came out slightly below expectations. The European sovereign debt market showed some volatility throughout the session, taking into account the holiday in the United Kingdom and the low trading volume, but sales were not exempt, with the main curves widening an average of 3 bps, with the German and Italian 10yr benchmarks at levels of 1.80% and 4.08% respectively, while the Spanish bond continues to narrow the path towards the 3% peak. The Governor of the Bank of Spain considers that inflation will be intense and long-lasting in the Eurozone, as it will be intensified by the escalation of the energy conflict with Russia. Meanwhile, the vice president of the European Central Bank, Luis de Guindos, insisted that the monetary authority must strengthen its credibility. INFORMATIONTitleThe FED meeting and its decision on interest rates, key event of the weekDescriptionWe are starting a crucial week full of central bank meetings. The most important will be that of the FED, from which the third consecutive increase of 75 bp is probably expected on Wednesday, thus taking the official rate to a range of 3-3.25%. Author GLOBALCAJA
The FED meeting and its decision on interest rates, the key event of the week
