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Has the Federal Reserve finished raising interest rates?

The Federal Reserve is widely expected to leave interest rates unchanged at the end of its latest policy meeting on Wednesday.

Investors will be watching for clues as to whether this means the world’s most powerful central bank is done raising borrowing costs or is simply taking another pause in its historic tightening campaign.

Fed policymakers have indicated they expect to keep interest rates at their current levels, in a range of 5.25 to 5.5 percent, at the two-day meeting. This follows a 0.25 percentage point rate hike in July.

Fed officials are trying to reduce inflation without plunging the economy into recession – a so-called soft landing. While inflation has fallen from a high of over 9 percent last summer to below 4 percent today, fears of a renewed rise in prices are growing.

According to figures this week, gasoline prices pushed up consumer prices in August, even as core inflation, which excludes the volatile food and energy sectors, continued to slow. U.S. retail sales also rose more than forecast in August, the Commerce Department reported Thursday, as a rise in gasoline prices outweighed weak spending elsewhere in the economy.

Senior Fed officials, including Dallas Fed chief Lorie Logan and New York Fed chief John Williams, have signaled that they do not expect to raise interest rates in September, but have not said that the fight against inflation be successful.

“We expect the committee to continue to embrace the ‘higher for longer’ message,” said Oscar Munoz, chief U.S. macro strategist at TD Securities. Fed Chairman Jay Powell’s news conference and a series of new interest rate forecasts from the central bank’s rate-setting committee “may have a hawkish overtone as Fed officials are unlikely to completely close the door on further rate hikes,” Munoz added. Kate Duguid

Will the Bank of England raise interest rates again?

Investors are bracing for an important week in the UK economic calendar as August inflation figures are due a day before the Bank of England’s interest rate decision.

Despite growing signs of economic weakness, the Bank of England is widely expected to deliver its 15th consecutive interest rate hike on Thursday, which would take key interest rates to 5.5 percent.

That could change if official figures show a sharp fall in Britain’s inflation rate on Wednesday, but economists polled by Reuters expect the overall inflation rate to have accelerated to 7 percent last month following a recent rise in gasoline prices. They expect core inflation – which excludes food and energy prices – to remain at the July level of 6.8 percent.

Traders will be looking closely at the language in the Bank of England’s (BoE) monetary policy committee’s statement on its interest rate decision for clues to the end of the tightening cycle after the European Central Bank delivered a “loose rate hike” this week.

In parallel with Thursday’s interest rate decision, the Bank of England will announce how many British government bonds it plans to sell from its asset purchase facility in the next financial year as part of its so-called quantitative tightening program.

Barclays expects the BoE to increase sales to £100 billion from £80 billion in the current financial year. Mary McDougall

Will China’s central bank loosen monetary policy?

As China’s economic data begins to show signs of improvement, all eyes will be on the country’s key interest rate announcement on Wednesday, marking the next big signpost for the performance of the world’s second-largest economy.

A median forecast from economists surveyed by Bloomberg expects the benchmark one-year loan rate to remain unchanged, as will the five-year LPR that underpins mortgage rates in China.

Becky Liu, head of China macro strategy at Standard Chartered, said the timing of the People’s Bank of China’s recent cut in Chinese lenders’ required reserves “suggests the PBoC’s monetary easing could remain bold as the year progresses.” .

“We do not rule out the possibility that key interest rates on one- and five-year loans will be cut next week,” she added. “These developments will likely lead to lower interest rates across the board in China.”

Others were less optimistic about the likelihood of a rate cut, saying further easing would likely put downward pressure on the renminbi’s dollar exchange rate.

Robert Carnell, head of Asia-Pacific research at ING, said: “Given the current challenges, the People’s Bank of China is helping to provide support.” [renminbi]It is unlikely that the central bank will announce further rate cuts.” Hudson Lockett

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