The Federal Reserve raised interest rates by 0.25%, much of which was priced in. But Federal Reserve Chairman Powell signaled that there would be another 0.25% hike before this contractionary cycle ends, which was a hawkish tone. but, there is not even a certainty that there will be another interest rate hike or not. because Fed policy no longer depends on inflation and all banking stress and crisis available too. As Powell put it, “adequate credit enhancement from bank problems” somehow “substitutes for rate hikes.”
And uncertainty about the credit crunch adds to the confusion about the Fed’s policy
Now it is the turn of Europe and England
After the Fed meeting and Powell’s speech, European Central Bank President Lagarde reiterated that the ECB will maintain a “strong” approach to responding to inflationary risks and that the 2% inflation target is non-negotiable.
This year we see a hawkish European Central Bank and a weakened American Central Bank. The easing of the US Federal Reserve and the hawkishness of the European Central Bank could have increased the expectations that EURUSD could continue its possible growth above the 1.10 range. The 1.1275 range is currently considered a logical target for buyers.
In the case of England, the high inflation shocked everyone and the new inflation report destroyed the predictions of Billy, the head of the Bank of England, that “we will see a sharp drop in inflation”.
Due to the fact that inflation will not decrease on its own, it is almost certain that the Bank of England will increase the interest rate by 0.25% in today’s meeting and we can see higher prices for all GBP pairs.
