Expectations were high last week heading into the US Federal Reserve’s September decision, with the FOMC announcing the beginning of the balance sheet wind-down and the prospect of one more rate hike before year-end. The Fed will commence balance sheet reduction in October at a rate of $10 billion per month with an additional $10 billion added once every three months until the total amount of balance sheet sales reaches $50 billion monthly. Apart from policy, existing home sales tumbled -1.70%, extending the current contractionary trend for a third straight month as concerns about the housing outlook multiply.
Switching gears, the UK Pound crashed towards the end of the week before briefly recovering on the heels of a Moody’s sovereign credit downgrade to A2. In addition, a speech from Theresa May indicating that she wants to set an official two-year transition with deadlines to jumpstart EU negotiations weighed on the currency. Across the English Channel, Eurozone annualized inflation climbed to a four-month high of 1.50% through the end of August, adding to tapering pressure facing the ECB. Canadian inflation also rose on a headline basis, climbing 1.40% year over year through the end of August. Finally, in an unsurprising development, the Bank of Japan refrained from adjusting interest rates and easing after its latest monetary policy meeting.
US Fed Unveils Unwind Strategy
Weekly Report - 24/09/2017