This week was marked by key meetings of the Federal Reserve, the Bank of England, and the Bank of Japan. Attention centered on the US Federal Reserve’s decision to cut interest rates alongside the unchanged monetary policies of the UK and Japanese central banks.
The ZEW Indicator of Economic Sentiment for Germany for September fell sharply to 3.6, well below the forecast of 17.1 and the previous figure of 19.2. This decline in sentiment was reflected in the EUR/USD pair, which remained under pressure, trading below 1.1137.
In the US, retail sales surprisingly rose by 0.1% in August, defying analysts’ expectations of a 0.2% decrease. Total sales reached $710.8 billion. Despite a slowdown in sales, the 1.1% increase in July bolstered positive outlooks for the US economy.
UK inflation data for August revealed a steady increase in consumer prices to 2.2%, aligning with forecasts and exceeding the Bank of England’s target. Core CPI rose by 3.6% year-over-year, surpassing market expectations.
In the eurozone, annual inflation eased to 2.2%, matching forecasts. Meanwhile, US housing starts unexpectedly surged by 9.6%, revitalizing the housing market following a slump in July.
The major highlight of the week was the Fed’s decision to cut interest rates by 50 basis points to 4.75%-5%. This cut, the first in four years, exceeded market expectations.
The Bank of England maintained its key interest rate at 5.00%, as anticipated.
In the US, the labor market showed resilience with weekly jobless claims dropping to 219K, indicating employment stability. However, existing home sales in the US fell by 2.5% in August, which was better than expected, suggesting a potential slowdown in real estate activity.
The UK reported retail sales that rose by 1.0% month-over-month and 2.5% year-over-year, exceeding expectations. As expected, the Bank of Japan kept its interest rate at 0.25%. The BOJ governor stated that the easing policy will persist to achieve economic objectives given the ongoing uncertainties in the country.
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