Rate Hike

• The Australian dollar reached its highest level since May as traders increased bets on potential interest rate hikes by the Reserve Bank of Australia (RBA). • In a separate industry shift, MUFG Pension & Market Services has entered into a binding scheme implementation deed to acquire the administration platform Grow. • This acquisition follows previous issues where HESTA members faced difficulties accessing retirement savings, prompting intervention from the financial regulator APRA.

• The European Central Bank (ECB) is preparing to increase its key policy rates during its upcoming September meeting. • Sources indicate that the central bank currently has no appetite for further interest rate hikes following the September decision. • Policy decisions are determined by the ECB President, Christine Lagarde, alongside six permanent members and the heads of Eurozone national banks.

• The Reserve Bank of Australia (RBA) has reduced its target share of US dollars within its foreign reserves portfolio by 10 percentage points for 2025. • This strategic shift occurs as major banks predict another interest rate hike may be necessary this year to manage economic pressures. • Separately, China's vice-finance minister pledged in late August to implement additional fiscal support measures following a loss of economic momentum in the third quarter.

ABS says CPI was 3.5% in July, casting doubt on Reserve Bank meeting its 2.5% inflation target without further hikeFears are growing that the Reserve Bank will hit millions of mortgage holders with a fourth rate hike this year, after inflation eased in July but by far less than expected.Consumer prices climbed by 3.5% through the year, down from 3.8% in the previous month, according to the Australian Bureau of Statistics. Continue reading...

• The UK labour market is cooling, with youth unemployment dropping to 16.2%, though it remains high, potentially reducing the need for further Bank of England interest rate hikes. • Grocery inflation has slowed to a two-year low, while Brent crude oil prices have climbed above $91 a barrel following the end of the US-Iran ceasefire. • Government officials are considering unprecedented interventions in the gas market, including financial support for storage and pipeline operators to ensure long-term infrastructure maintenance.

• Asian stock markets generally rose, led by a significant 3.7% rally in South Korea’s Kospi Index, while Japan’s Topix and the Shanghai Composite both climbed 0.5%. • The positive momentum follows a cooler-than-expected US jobs report and CPI reading, which Wells Fargo suggests may discourage the Federal Reserve from taking hawkish rate hikes in September. • Despite the broad rise, caution remains as Cisco Systems' shares dropped 4.1% due to disappointing earnings, and Cerebras Systems plummeted 17% following a decline in hardware sales.

• Asian stock markets are positioned to end the week with overall gains. • The positive momentum is driven by decreasing investor bets that the U.S. Federal Reserve will implement further interest rate hikes. • This shift in sentiment matters as lower expected U.S. rates typically boost investor appetite for riskier assets in emerging Asian markets.

• Global equities rose on Thursday, with Asia-Pacific shares outside Japan climbing 0.96% and emerging market stocks increasing 0.85% to 1,696.17. • The rally was driven by investors reducing their bets on further U.S. interest rate hikes, though the pan-European STOXX 600 remained muted, closing at 659.24 points. • Oil prices declined due to higher inventories, which subsequently weighed down energy and mining shares across European markets.

• US stock markets, including the S&P 500, Nasdaq, and Dow, rose as falling crude oil prices and softer inflation data boosted investor sentiment. • Core Producer Price Index (PPI) rose 0.2%, coming in below the 0.3% forecast, following a July Consumer Price Index (CPI) increase of 0.1%. • These subdued inflation readings are significant because they have led traders to reduce expectations for a potential interest rate hike in September.

When it comes to the Reserve Bank, there’s a whiff of a parent making a threat they have no intention of carrying outGet our breaking news email, free app or daily news podcastEvery parent makes threats in an effort to get their kids to behave – and every parent hopes they won’t have to follow through.Some (most?) parents even make threats they have zero intention of carrying out. Continue reading...

• Victorian Premier Ben Carroll has announced delays to a pioneering government bill that would legislate a right for employees to work from home two days a week. • The legislation, described as a "nation-first" initiative, will now be postponed and will not take effect until after the upcoming election. • This move impacts the timeline for establishing formal remote work entitlements for Victorian workers, shifting the focus toward the electoral cycle.

• The S&P 500 closed at a record high following a softer-than-expected U.S. jobs report, which reduced investor concerns regarding further interest rate hikes. • Data from the U.S. Labour Department revealed that nonfarm payrolls dropped by 23,000 jobs in July, falling significantly below market estimates. • Market analysts, including Tom Siomades of AE Wealth Management, note that while weak employment may force rate cuts to stimulate growth, such moves risk increasing inflation.

• The TSX and S&P 500 both closed at record highs, with the Canadian benchmark achieving its largest weekly gain in four months. • Market optimism is driven by strong corporate performance, as 85.1% of the 436 S&P 500 companies reporting results so far have exceeded analyst expectations, surpassing the historical average of 68%. • This rally persists despite contradictory economic signals, including weak job numbers and higher inflation, which typically suggest a need for rate hikes rather than cuts.

• US stocks rose to end a winning week, with the Nasdaq jumping 1.3% on the day and 5% for the week, while the S&P 500 gained 0.6% and the Dow rose nearly 0.3%. • The rally followed a surprise July jobs report showing the US economy lost 23,000 jobs, significantly missing Bloomberg economists' expectations of 80,000 new positions. • This unexpected decline in job growth has eased investor fears regarding further Federal Reserve interest rate hikes, as a cooling labor market may prompt a policy shift.

• European stock markets experienced an upward trend as strong corporate earnings reports helped counteract investor anxiety. • The positive momentum in equities served as a buffer against fears that the U.S. Federal Reserve may implement further interest rate hikes. • This shift highlights a tug-of-war between fundamental company growth and the macroeconomic pressure of tightening monetary policy.

• The Federal Reserve maintained its key interest rate at the July policy meeting, easing Wall Street's concerns regarding a potential rate hike. • Official Warsh signaled a strategic shift away from "forward guidance" and "data dependency," advocating for a more forward-looking approach rather than relying on lagging economic data. • This move matters as it aims to reduce the central bank's role as the primary market driver, with Warsh stating that the Fed "need not always be the center of attention."

• New Federal Reserve chair Kevin Warsh is facing immediate internal conflict after three policymakers dissented against the central bank's decision to keep interest rates unchanged. • This level of early opposition is historically rare, contrasting with the smoother transitions experienced by previous Fed leaders such as Janet Yellen and Jerome Powell. • The dissent highlights a growing divide within the Fed regarding the appropriate pace of monetary policy and interest rate adjustments.

• The Federal Reserve decided to hold interest rates steady, though the decision was marked by three members who dissented in favor of a rate hike. • In a statement issued under Chairman Kevin Warsh, the Fed noted that economic activity continues to expand at a solid pace despite uncertainties caused by conflict in the Middle East. • The presence of three dissenting votes is significant as it signals a potential shift in policy, raising the prospect of a rate increase in September.

• On 23 July 2026, the European Central Bank (ECB) decided to keep its three key interest rates unchanged, including maintaining the deposit rate at 2.25%. • This pause follows a quarter-percentage-point increase in June, as policymakers weigh slowing underlying inflation against renewed pressure from rising oil and gas prices. • The decision highlights a tension between cooling inflation and upside risks, with hawkish internal debates intensifying.

• ECB President Christine Lagarde announced on June 11, 2026, that inflation is expected to remain well above target levels until the first half of 2027. • The central bank is currently evaluating how to respond to a significant spike in energy prices that threatens price stability. • Market traders are now pricing in a potential interest rate hike for September to combat these persistent inflationary pressures.

Economists’ warning comes as escalating Middle East crisis pushes global crude oil back above $US100 a barrelGet our breaking news email, free app or daily news podcastAustralian households face the prospect of a Reserve Bank interest rate hike and petrol prices above $2 a litre over the coming weeks, economists warn, as the escalating Middle East crisis pushes global crude back above $US100 a barrel.Financial markets now see an even chance the RBA board will deliver a fourth cash rate increase at the next meeting on 11 August. Continue reading...

• The European Central Bank maintained interest rates at 2.25% on Thursday, pausing after its first rate hike in three years occurred in June. • While easing inflation provided a temporary reprieve, renewed conflict in the Middle East has driven up energy prices, leaving a second hike possible for autumn. • Market attention now shifts to the U.S. Federal Reserve's announcement next Wednesday, where futures markets indicate an 89% probability that rates will remain unchanged.

• The European Central Bank (ECB) is expected to keep interest rates steady during its upcoming policy meeting. • While holding rates, policymakers are likely to signal that further hikes remain a possibility for September. • This cautious strategy is driven by rising energy prices, which threaten to reignite inflationary pressures across the euro area.

Experts warn global energy market at a ‘critical juncture’ with escalating Middle East crisis expected to further drag on a slowing Australian economyFollow our Australia news live blog for latest updatesGet our breaking news email, free app or daily news podcastThe likelihood of a Reserve Bank interest rate hike has doubled according to market forecasts, as the escalating Middle East crisis once again drives fuel prices higher amid dwindling global oil reserves.The total breakdown in the fragile ceasefire between the United States and Iran has sent the international Brent crude benchmark surging by 23% over the past two weeks and back within reach of $US90 a barrel. Continue reading...

• Major U.S. indices declined, with the Nasdaq falling 1.68%, the S&P 500 dropping 0.81%, and the Dow Jones slipping 0.09% as semiconductor and tech stocks tumbled. • Market volatility was driven by a poor earnings forecast from Netflix and rising geopolitical tensions following a speech by Donald Trump regarding Iran. • Brent crude oil surged over 3% to $86.91 per barrel, fueling inflation concerns, while Bitcoin climbed above $63,309.06 and precious metals attempted a recovery.

• The KOSPI plummeted over 6% to close at 6,820.60 on the 16th, driven by a sharp decline in global semiconductor stocks and domestic monetary policy shifts. • Major tech-related shares saw significant losses, with SK Square preferred shares dropping 12.30%, Samsung Electronics falling 10.42%, and Jusung Engineering sliding 10.31%. • The sell-off was further intensified by the Bank of Korea, which signaled the start of a full-fledged interest rate hike cycle.

• Asian markets experienced volatility following the release of U.S. employment data showing the economy added only 57,000 jobs in June. • The unexpectedly low job growth has significantly dampened investor expectations that the Federal Reserve will implement further interest rate hikes. • This shift in sentiment is critical as it suggests a cooling U.S. labor market, which may prompt the Fed to pivot toward maintaining or lowering rates to support economic growth.

• Asian equities rebounded yesterday following data showing a sharp decline in new job creation, which reduced the likelihood of an imminent US Federal Reserve interest rate hike. • This recovery follows a period of significant volatility where foreign investors sold Asian equities at the fastest pace in 16 years during the first half of 2026. • Net sales totaling $137.4 billion were recorded through June 30, as investors took profits from an AI-driven rally across markets including South Korea, Taiwan, India, Indonesia, Thailand, Vietnam, and the Philippines.