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On January 31st, Federal Reserve Chairman Mohamed Mussala stated on Friday that he was reluctant to support further interest rate cuts given that inflation had consistently remained above the Feds 2% target. Mussala said he agreed with the Feds decision this week to keep interest rates unchanged, arguing that the Feds target rate of 3.5% to 3.75% was no longer high enough to significantly dampen the economy. He believes that persistent price increases should prevent the Fed from lowering rates to support the economy. Mussala stated, "Given that inflation is above target and the risks to the economic outlook are broadly balanced, I dont think its appropriate to lower interest rates into an accommodative range at this time." Mussala also pointed out that attempting to alleviate labor market pressures by lowering short-term interest rates controlled by the Fed could be counterproductive. He said such a move could trigger concerns about future inflation and push up long-term interest rates, which are a key factor determining mortgage costs and business borrowing costs.Federal Reserves Mossallem: Economic tailwinds are expected to boost economic growth in 2026.Federal Reserves Mossala: The risk of a sharp decline in the job market has diminished.Federal Reserves Mossalim: Inflation is expected to fall to around 2%, but he believes it may remain above 2% for an extended period. Further rate cuts could exacerbate inflation expectations.Federal Reserve Chairman Mossallem: The economy is expected to continue to grow at an above-trend pace, driven by credit conditions and fiscal policy.

GBP/JPY slips below 165 as BOJ prepared to act; UK retail sales are scrutinised

Alina Haynes

Sep 15, 2022 11:46

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The GBP/JPY pair dropped below the crucial support level of 165 during the Asian session. The asset is falling precipitously now that the Wednesday buffer of 166.00 has been lost. The cross has developed a trading range between 164.80 and 165.87, and it is more likely than not that it will break to the downside and drop below 164.00.

 

The fall in the headline UK inflation numbers did not produce any gains for the pound bulls. The Consumer Price Index (CPI) for the year came in at 9.9%, which was less than both the predicted value of 10.2% and the preceding reading of 10.1%. The economy is no longer facing double-digit inflation, despite the fact that the current inflation rate of 9.9 percent is still relatively high, despite rising energy prices. But at 6.3%, the core CPI remained in line with forecasts.

 

Given that lower readings are not a permanent trend, it would be premature to declare an end to pricing pressures. Inflationary pressures will continue to rise as a result of Liz Truss, the new prime minister of the United Kingdom, introducing stimulus plans to shield people from rising energy prices and cut back on tax rates.

 

The UK Retail Sales numbers will be the topic of discussion on Friday. Compared to the 3.4% recorded earlier, the economic data are predicted to show a 4.2% annual loss. In addition, instead of the 0.3% increase previously indicated, the monthly figure will fall by 0.5%.

 

The Bank of Japan (BOJ) has vowed to interfere in the foreign exchange market to support the domestic currency, which has given the yen bulls a boost. Nikkei reported on Thursday that the BOJ carried out a foreign exchange "check" to find out how much market participants value the JPY. The news source claims that this is proof that the BOJ might be getting ready to intervene in the market.


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