Inflation in the USA, which rose to 8.50 percent, the highest level in the last 41 years, prompted the Fed to raise interest rates by 50 basis points for the first time since 2000. Thus, the Fed increased the policy rate to the range of 0.75-1.00%.
In the statement made by the Fed, it was noted that inflation remains high reflecting the supply and demand imbalances related to the epidemic, rising power prices and wider price pressures, aiming to achieve 2 percent inflation and maximum employment in the long term, It was mentioned that with the appropriate tightening of the policy stance, inflation is expected to return to its 2 percent target and the labor market is expected to remain strong.
In the statement that the Fed will also start to shrink its balance sheet on June 1, it was noted that in the first stage, it will decrease 30 billion dollars a month in treasury bonds and 17.5 billion dollars in mortgage -backed securities.
In the statement, it was stated that after the first 3 months, the monthly measure for reducing the balance sheet will be increased to 60 billion dollars for treasury bonds and 35 billion dollars for mortgage-backed securities.
Fed Leader Powell, on the other hand, stated that 50 basis points additional interest rate increases should be on the table in the next few meetings of the bank.
Stating that inflation is very high and they are aware of the difficulties it causes, Powell stated that they acted quickly to reduce inflation.
Powell, reiterating that they will be ready to change every detail of their approach in the light of economic and financial developments, “Making appropriate monetary policy in this unknown environment requires accepting that the economy often develops in unexpected situations. ” he said.
On the question of whether there will be an increase in the rate of more than 50 basis points, Powell said, “A 75 basis point increase is not something that the Committee considers effectively.”
After Powell’s statements, the expectation that the Fed would raise interest rates by 75 basis points at the June meeting in the bond markets decreased considerably.
Analysts noted that the increasingly aggressive hawkish tone in the Fed’s decision text and Powell’s statements has been replaced by calmer explanations, increasing the risk appetite of investors.
With the Fed decision and Powell’s statements, the S&P 500 index gained 2.99 percent, the Nasdaq index 3.19 percent and the Dow Jones index 2.81 percent in the New York stock market, with the strengthened near the end. Index futures contracts in the USA started the new day with a flat course.
In Europe, eyes are turned to the Bank of England (BoE), while the strong purchases seen in the USA yesterday in the futures markets are expected to be reflected in the European stock markets in the new day.
While it is predicted that the BoE will increase the policy rate by 25 basis points to 1 percent, uncertainties regarding balance sheet reduction continue.
Analysts stated that the BoE was priced to raise interest rates by 50 basis points until the last days, but the expectations decreased to 25 basis points due to the problems in the economy, which the macroeconomic information announced in the country pointed out.
Analysts noted that the bank is expected to start shrinking its balance sheet before the end of the year, however, and that the roadmap for the subject could be announced at a random meeting.
Yesterday, the DAX 30 index was 0.49 percent in Germany, the FTSE 100 index was 0.90 percent in the UK, the CAC 40 index was 1.24 percent in France, and the FTSE MIB 30 index was 0 percent in Italy . 69 depreciated. Index futures contracts in Europe started the new day with buyers.
While the buying-laden course in the US stock markets is carried over to the new day with the Asian stock markets, the concerns about the new type of coronavirus (Kovid-19) epidemic in the Chinese stock market are eroding the upper-sided movement.
Analysts stated that the panic that the situation in China may cause inflation pressure on a global basis has strengthened, and that the lack of relaxation in China’s economic policies despite increased expectations the anxiety of investors.
According to the data announced in the region, the service branch Purchasing Managers Index (PMI) in China decreased to 36.2 in April.
With these developments, Shanghai composite index gained 1.1 percent in China and Hang Seng index in Hong Kong gained 0.7 percent near the closing. In Japan, markets are closed today for a holiday.
Inflation data for April, which will be announced in the domestic markets, which will be opened to the process today after the three-day holiday, has placed the focus of investors.
Economists participating in the expectations survey conducted by AA Finance expect the Consumer Price Index (CPI) to increase by 5.96 percent in April.
BIST 100 index, which rose last week, albeit finitely, with purchases close to the close on Friday, completed the day at 2,430.55 points with an increase of 0.09 percent.
Dollar/TRY is trading at 14.7720 at the opening of the interbank market today, after closing at 14.7392 with a 0.5 percent decrease yesterday.
Analysts, today, in addition to inflation in the country, manufacturing industry PMI and Domestic Producer Price Index (D-PPI) abroad, factory orders in Germany, services PMI in England and weekly unemployment applications in the USA. He promised to keep track of his data.
Analysts said that 2,420 points in the BIST 100 index are technically in the mains position, and that the 2,480 and 2,520 levels will come to the fore as resistance.