Despite continuing recession fears, a positive trend is observed in global markets with the effect of comments that a soft landing could be made in the economies. As US Federal Reserve (Fed) officials continue their verbal guidance on monetary policy, the government is also sharing possible policies with the public in the face of growing recession concerns.
Fed Chairman Louis James Bullard said yesterday that if macroeconomic data come true in line with his expectations, it will support a sharp rise in interest rates in July and that they think they can reduce inflation without putting the economy into recession. American. Ahead of Fed Chairman Jerome Powell’s speech tomorrow, it is almost certain that the Fed will raise the policy rate by 75 basis points at its next meeting, while the probability of a 75 basis point hike in the September meeting is 40 percent. .
NEW RECORD EXPECTED FOR GOLD
THE FED’S STEPS FOCUS ON INVESTORS
While the steps to be taken after July are expected to provide more understandable clues as to whether or not the US economy will enter a recession, Powell is expected to provide guidance on this period in his speeches this week.
If the equity markets have been following a positive, albeit cautiously, trend with the determination to fight inflation and the expectations that the US economy could overcome this period without entering recession, are also the statements released today by Fed officials. at the heart of investors.
EUROPE IS GETTING READY TO INCREASE IN INTEREST
While statements by European Central Bank (ECB) President Christine Lagarde were high on the agenda in Europe yesterday, Lagarde said ECB officials intend to raise interest rates at their July and September meetings. Lagarde said that interest rates could increase by 25 basis points in July and that, despite persistent questions about the tool developed to intervene on bond yields, it was still early to make a statement on this issue. ECB chief economist Philip Lane noted that negative interest rates are no longer appropriate in the euro zone, adding that raising the policy rate will increase the risk premium across all units of the economy.
EURO AND DOLLAR
The dollar is not moving away from its 20-year high after the Fed’s 75bp rate hike. The Fed’s expectation that interest rate hikes will continue in full swing and that some Fed officials predict it will take a few years before inflation reaches the 2% target are supporting factors for the dollar. The dollar index is currently at 104.19. Experts say Fed Chairman Jerome Powell’s statements to the Senate Wednesday and Thursday could be effective in the direction of the dollar. In Europe, on the other hand, the euro / dollar parity, reinforced by the declarations made, rose to 1.054. With these developments, a horizontal pattern is dominant in exchange rates, as was the case yesterday. Dollar / TL is flat at 17.31-17.32 levels; Euro / TL is trading around 18.21.
CENTRAL BANK ANNOUNCES ITS INTEREST DECISION
Another development that will have an impact on exchange rates will be the interest rate decision to be announced by the Central Bank of the Republic of Turkey on Thursday 23 June. As the markets eagerly awaited this decision, the economists’ forecasts became clear. The CBRT is expected to keep the weekly repo rate constant at 14.00%.