The Bank of Russia unexpectedly maintained its key interest rate at a record-high 21% , defying analysts’ expectations of another significant hike as inflation remains stubbornly elevated. The decision marks a shift toward a more measured approach in balancing economic growth and price stability. Key Details Inflation Concerns: Annual inflation climbed to 8.9% in November, well above the central bank’s 4% target , with inflation expectations reaching 13.9% in December. Policy Rationale: The central bank cited the significant tightening of monetary conditions after October’s 200-basis point hike as sufficient to resume disinflationary processes. Governor Elvira Nabiullina emphasized avoiding both economic overheating and severe slowdowns. Economic Overheating: Elevated government spending on the war in Ukraine and social programs, coupled with labor shortages and rising wages, have fueled strong domestic demand, exacerbating price pressures...
US main stock indices rose slightly on Friday, with small-cap stocks outperforming after a tame inflation report, suggesting the Federal Reserve could shift its focus toward the labor market while continuing its path of interest rate easing.
The Commerce Department's report indicated that consumer spending grew moderately in August, maintaining the economy's solid momentum in the third quarter while inflation pressures continued to ease. This gave the Fed more room to address rate cuts. “It’s a relief to have inflation moving in the right direction,” said Joe Saluzzi, co-head of equity trading at Themis Trading, who noted that the key issue is whether the Fed will continue cutting rates in the coming year.
Markets now assign a 52.1% chance of a 50 basis-point rate cut at the Fed's November meeting, with the likelihood of a 25 basis-point cut standing at 47.9%, according to the CME Group's FedWatch Tool.
At 9:55 a.m. ET, the Dow Jones Industrial Average rose 141.53 points (0.34%) to 42,316.64, while the S&P 500 and Nasdaq Composite posted modest gains of 0.08% and 0.07%, respectively. The Russell 2000 index, which tracks small-cap stocks, outperformed with a 0.7% rise.
Among S&P 500 sectors, energy stocks led the gains, up 1.1%, while tech stocks like Nvidia and Amazon dipped, weighing on the Nasdaq.
Investors are also keeping an eye on the labor market, with upcoming reports expected to influence the Fed's future decisions on rate cuts. Consumer sentiment improved, with the University of Michigan’s September estimate rising to 70.1, above expectations.
On the corporate front, Bristol-Myers Squibb jumped 2.3% after receiving FDA approval for its schizophrenia drug, while Costco Wholesale fell 2.8% following weaker-than-expected quarterly revenue.
Meanwhile, Chinese stocks listed in the US, including Alibaba, PDD Holdings, and NetEase, saw gains after China's central bank implemented fresh stimulus measures by lowering interest rates and injecting liquidity into the banking system.
Overall, advancing issues outpaced decliners significantly, reflecting the market’s positive sentiment amid easing inflation and expectations of continued rate cuts.
Comments
Post a Comment