Tag: Interest Rates

Federal Reserve Hold Interest Rates Steady

Written by IntaCapital Swiss on . Posted in News & Reports. Leave a Comment

On Wednesday 17th June, and for the fourth straight meeting, the FOMC (Federal Open Market Committee) announced that benchmark interest rates will remain steady at 4.25% – 4.50% with policymakers voting unanimously for the hold, but also indicating that borrowing costs will probably fall between now and the end of the year. However, Federal Reserve Chairman Jerome Powell reiterated along with the FOMC statement that policymakers will wait and see how economic data evolves moving forward.

The FOMC also released a new set of economic forecasts being the first set of forecasts since President Donald Trump announced his tariff programme on April 2nd this year famously referring to them as Liberation Day. The FOMC’s forecasts show that for the rest of 2025 they expect higher unemployment, weaker growth, and higher inflation, thus by years end unemployment will be slightly up from the previous estimate to 4.5%, economic growth will be at 1.4% down from 1.7%, and inflation at 3% up from 2.7%.

Experts suggest that the Federal Reserve is in a bit of a quandary with higher inflation suggesting an increase in interest rates whilst falling growth suggests a lowering of interest rates to stimulate the economy. President Trump has persistently said the Federal Reserve should lower interest rates and even before the announcement yesterday President Trump referred to Chairman Powell as stupid. However, officials from the Federal Reserve do expect upward pressure on prices as the expanded use of tariffs by President Trump begin to weigh on economic activity.

Analysts suggest that so far the economy of the United States has proved resilient, as in recent months unemployment has held steady and inflation has risen less than expected. However, Chairman Powell has added that officials are beginning to see some effects from tariffs with more to come over the next few months but he did re-emphasise the Federal Reserve’s commitment to ensure price pressure does not become more persistent. Many experts in the financial markets have forecasted a meaningful rise in inflation but Chairman Powell countered with “the jobs market is not crying out for a rate cut” whilst adding that tariffs are an unavoidable cost increase to consumers and businesses. 

Chairman Powell’s take on tariffs is that the United States Economy has not yet seen the full effects of tariffs on prices for consumers and has confirmed the Federal Reserve will hang tight until data gives us a better idea of what’s going on. As part of his post-meeting conference with the media he said, “for the time being we are well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policies”. 

That said, experts within the financial markets have said that according to interest rate futures they see a more than 70% chance of a rate cut in September, however some economists suggest that it will take until then to at least see the impact of all of the administrations policies on immigration, spending and the impact on trade. They are therefore at odds with those in the financial markets proving that as tariffs and Donald Trump have become central to the Federal Reserve’s thinking.

The European Central Bank Cuts Interest Rates

Written by IntaCapital Swiss on . Posted in News & Reports. Leave a Comment

Today the ECB (European Central Bank) for the eighth time in a year cut interest rates by 25 basis points leaving the deposit rate standing at 2%. The governing council were unanimous in their decision to cut three key interest rates with the President of the ECB Christine Lagarde saying that following the eighth reduction the ECB is coming to the end of the line with regard to interest rate reductions and their monetary policy cycle. The President told reporters “At the current level of interest rates, we believe that we are in a good position to navigate the uncertain conditions that will be coming up”.

Officials from the ECB describe inflation as “currently around” the 2% target. New quarterly projections issued by the ECB show inflation in 2026 at 1.6% which is below the current target, with the economy expected to expand by 1.1% in the same year. In another statement issued by the ECB it was said that trade uncertainty is likely to weigh on business investment and exports, however growth will be boosted later by government investment in infrastructure and defence.

President Lagarde also referred to growth skewed to the downside but was cheered by the fact that easier financing, a strong labour market and rising incomes should help firms and consumers withstand the fallout from a global environment suffering from severe volatility. She went on to say that despite a stronger euro weighing on inflation in the near term and decreasing emerging costs, inflation is expected to return to target in 2027.

There is of course the continuing problem of the Trump2 Presidency and tariffs. Currently most European exports are facing tariffs of 10% (except steel and aluminium which now has a global tariff of 50% except the United Kingdom who are paying 25%), however levies will rise to 50% should trade negotiations between the European Union and the United States remain deadlocked and no agreement is reached by July 9th 2025. However, the German Chancellor Friedrich Merz will shortly be meeting with President Trump and one of the main topics if not THE main topic will be trade, and Europe will hope something positive will come from this meeting.

The cut in interest rates had been largely priced in by traders with LSEG (London Stock Exchange Group) data showing the ¼ of 1% cut had a 90% chance of going through before the announcement was made. Financial markets have trimmed their bets on another ¼% reduction in rates as this move no longer seems certain. The economic policies of President Trump, his attacks on the Chairman of the Federal Reserve and his flip flopping on tariffs, has dented confidence in the U.S. economy, has strengthened the Euro, brought energy costs down and had a positive effect on European inflation. All eyes will be on July 9th, the set by Donald Trump for the EU and the U.S to agree a trade deal.

Will the UK’s Inflation Figures Strengthen the Bank of England’s Hawkish Bias?

Written by IntaCapital Swiss on . Posted in News & Reports. Leave a Comment

The latest data released by the ONS (Office for National Statistics), shows the United Kingdom’s inflation rate, the CPI (Consumer Price Index), jumped to 3.5% from 2.6% in April of this year, driven mainly by increases in water, energy and other price increases. Service inflation was seen accelerating from 4.7% to 5.4% and is an area the Bank of England watches closely for signs of underlying price pressure, and Bank officials had expected this figure to be 5%. Elsewhere Core Inflation (does not include food and energy) climbed to 3.8% which is the highest it has been since April 2024. Earlier this month, the Bank of England’s MPC (Monetary Policy Meeting) voted on yet another rate cut where two members voted to hold rate cuts, and the above figures bear out their cautiousness.

The Bank of England’s target inflation figure is 2%, and the current rate of inflation is well above that target and furthermore, the Bank of England expected this figure to rise and peak at 3.7% in September of this year. Other data shows consumer prices rising by 1.2%, the biggest rise for 24 months. Consumers in April were hit with a number of increases such as volatile air fares (up 16.2% year on year), water bills, local authority taxes, train fares and an across-the-board basic cost increase, which added to a pretty damning April for the government. However, analysts have noted that the Easter holidays were probably responsible for the jump in airfares (biggest month-on-month jump for April on record) and expect this figure to diminish before the summer holidays begin.

Experts suggest the financial markets are in favour of an end of year interest rate of 4% for the first time since the end of March/early April. This sentiment translates into one more rate cut this year suggesting that the Bank of England’s MPC will slam the door shut on an interest rate cut at its next interest rate meeting on Thursday 19th June 2025, with traders cutting an August interest rate cut from 60% to 40%. Markets also remember comments from the Bank of England’s Chief economist, Hugh Pill, who voiced in a hawkish speech that he feared interest rates were not high enough to keep the lid on inflation, and analysts suggest that it would not take too much for the swing voters on the MPC to move into the hawk’s camp especially after what the Consumer Price Index had recently shown.

Indeed, Mr Pill voted against a rate cut of ¼ of 1% earlier in May where he also said, “In my view, that withdrawal of policy restrictions has been running a little too fast of late, given the progress achieved thus far with returning inflation to target on a lasting basis. I remain concerned about upside risks to the achievement of the inflation target”. We will wait on the MPC’s meeting in June but the likelihood according to experts is a rate hold, plus we will also wait and see if Donald Trump’s economic policies impact further the global economy with any fall-out influencing decisions taken by bank officials. Elsewhere in April, it has been revealed that government borrowing for the month was £10 Billion, with data confirming this figure to be a new record. All in all, not the best 30 days with newspapers dubbing the month as “Awful April”.

Bank of England Cuts Interest Rates

Written by IntaCapital Swiss on . Posted in News & Reports. Leave a Comment

Today the BOE (Bank of England) announced a cut in interest rates with the MPC (Monetary Policy Committee) advising a reduction of 0.25% to 4.5%. The committee was divided, with five members voting for a ¼% cut, two members for a ½% cut, and the remaining two members voting to hold rates. Markets were surprised by the cautious approach, with President Trump’s tariff war weighing heavily on the outlook of the United Kingdom’s growth.

Caution was the watchword coming out of the MPC despite the divided votes saying that monetary policy easing should be “gradual and careful” in the light of volatility in the global economy which has been the result of President Trump’s wide-ranging tariffs. Forecasts by the BOE suggest that inflation will peak in Q3 2025 at 3.5% with growth being anticipated at 1% by close of business 31st December 2025, increasing to 1.25% for 2026 and then unchanged for 2027.

Following the decision by the MPC, Governor Andrew Bailey said in a statement “inflationary pressures have continued to ease so we have been able to cut interest rates today”. He went on to say “The past few weeks have shown how unpredictable the global economy can be. That is why we need to stick to a gradual and careful approach”. Traders had anticipated a bigger cut and were surprised by the decision, with one expert saying that this clearly is a hawkish cut.

The day before the MPC announcement was made, President Donald Trump revealed that the United States was about to make a trade deal with a major country, (later reported as the UK), and many commentators were then suggesting this would nudge the Bank of England into making a larger cut than they did. However, the BOE has made it crystal clear that they feel the greatest threat to the UK’s economy is from the global impact of U.S. tariffs. The BOE has given itself room to manoeuvre by saying “it will remain sensitive to heightened unpredictability in the economic environment and will continue to update its assessments of risks”.

As always, President Donald Trump is in the frame when it comes to important economic decisions, especially when it comes to Central Banks’ monetary policies on interest rates. As such, the BOE appears completely divided over interest rate decisions and which way monetary policy will go. Several experts have surmised that the BOE have been forced into being reactive rather than proactive or forward looking. Markets are suggesting another rate cut in August 2025, but for now the outlook remains uncertain.

United States Federal Reserve Holds Interest Rates

Written by IntaCapital Swiss on . Posted in News & Reports, Uncategorized. Leave a Comment

In the weeks leading up to today’s interest rate announcement by the FOMC (Federal Reserve Open Market Committee), President Donald Trump has viciously attacked the Chairman of the Federal Reserve, Jerome Powell. In one damning statement the President said on his social media post to “cut rates pre-emptively to help boost the economy,” saying Powell had been “consistently too slow to respond to economic developments”.

President Trump also wrote “There can be no slowing of the economy unless Mr Too Late, a major loser, lowers interest rates now”. This criticism (he has also threatened to replace Chairman Powell) came after Powell’s warning that Trump’s import taxes were likely to drive up prices and slow the economy. Below, the vote on interest rates by the FOMC reflects Chairman Powell’s and the Federal Reserve’s commitment to that warning.

Today the FOMC voted unanimously to hold its key benchmark interest rate at 4.25% – 4.50% where it has remained since December 2024. Confirming the decision, Federal Reserve Chairman Jerome Powell said that officials were not in a hurry to adjust interest rates adding that tariffs could lead to higher inflation and unemployment. Chairman Powell went on to say, “If the large increase in tariffs are sustained, they are likely to generate a rise in inflation, a slowdown in economic growth and an increase in unemployment”.

Experts suggest that the unpredictability of President Trump and his back and forth on tariffs makes it very difficult for the Federal Reserve to predict the future of the economy. However, the statements coming out of the Federal Reserve confirmed that currently the economy is resilient with improving job gains and the economy growing at a solid pace. At the same time, analysts suggest that the Federal Reserve is in a holding pattern as it waits for uncertainty to clear.

Several analysts and experts have said that the Federal Reserve’s monetary policy direction depends on how the risks develop on inflation or jobs, or in a more difficult scenario whether unemployment and inflation risks increase together. If both increase together, the Federal Reserve will have to choose which direction to take monetary policy as a weaker job market calls for rate cuts and higher inflation would call for a tightening of monetary policy.

In his post-statement comments Chairman Powell also added that inflation ignited by tariffs could be short-lived or long-lasting depending on how high tariffs go. Just before the FOMC released their interest rate statement President Trump indicated that he would not back down on the current duties of 145% imposed upon China. The wait and see element of Federal Reserve policy is here to stay for a while with some financial analysts suggesting a cut of 0.25% in interest rates will come in July 2025.

The European Central Bank Cuts Interest Rates

Written by IntaCapital Swiss on . Posted in News & Reports. Leave a Comment

Today, for the seventh time since June 2024, the ECB (European Central Bank) cut interest rates by 25 basis points, with the key deposit rate now standing at 2.25%, which according to data released by LSEG (London Stock Exchange Group) was anticipated by 94% of financial markets. Experts suggest that the cut comes amidst global economic and geopolitical uncertainty giving fears to falling economic growth within the Eurozone economies. The decision to cut rates by a 1/4 of 1%, was according to the President of the ECB Christine Lagarde, unanimous, with no member arguing for any other type of cut.

In a statement, President Lagarde advised, “Downside risks to economic growth have increased, with a major escalation in global trade tensions and associated uncertainties, will likely lower euro-area growth by dampening exports, and it may drag down investment and consumption. Deteriorating financial market sentiment could lead to tighter financing conditions”. Earlier this month the ECB was, according to experts, ruminating as to whether or not to hold interest rates, but Donald Trump’s tariffs soon put a stop to that, ensuring a unanimous vote today to cut interest rates.

The policy move to cut interest rates also became more attractive as data revealed that the ECB’s benchmark target rate of inflation of 2% was on the road to being achieved, whilst at the same time falling inflation was given a boost by falling energy costs. However, experts are fearful that potential tariffs of 25% and an all-out Eurozone U.S.A. trade war will banish hopes of revival in the economies of the European Union membership countries. Currently experts are predicting another cut in interest rates at the next ECB meeting in June this year, where the rate will then be held at 2% for the rest of the year. However, ever increasing market volatility has left some analysts suggesting even further cuts in the cost of borrowing after the June announcement.

The ECB also announced that in future they will not be pre-committing to any particular rate path, indeed interest rate decisions will be based on its assessment on the inflation outlook in light of incoming financial and economic data, the dynamics of underlying inflation, and the strength of monetary policy transmissions. As far as the Euro is concerned, the common currency has this month strengthened as investor sentiment has proved less resilient to other economies and more resilient towards the Euro arena. Once again, all eyes are on President Trump and the EU trade negotiating team to see if they can come to an agreeable solution regarding tariffs.

Swiss National Bank Cuts their Benchmark Interest Rate

Written by IntaCapital Swiss on . Posted in News & Reports. Leave a Comment

On Thursday, 20th March 2025, officials of the SNB (Swiss National Bank) cut their benchmark interest rate by 25 basis points to 0.25%, the lowest rate since September 2022. In the current cycle of quantitative easing, this is the fifth time the SNB has cut rates and President Martin Schlegel signalled that officials do not expect any more easing for the time being. The President went on to say that “This rate has an expansionary impact; in that sense the probability of additional policy easing is naturally lower”. Experts advise that pricing in the swaps market indicates no more rate cuts by the SNB in 2025.

The move to cut rates on Thursday follows a reduction in rates by 50 basis points in December 2024, a move that caught financial markets by surprise. Analysts suggest that this move completes their foreign-exchange policy which i.) is in anticipation of future market volatility and ii.) to deter inflows into the Swiss Franc. As a result of global trade tensions due to President Trump’s tariffs and other geopolitical and economic policies, the Swiss Franc is regarded as a safe haven for investors guarding against global instability.

Data released during the week prior to Thursday’s rate cut shows that in the last quarter of 2024, the SNB basically removed themselves from the foreign exchange markets, confirming one whole year without any considerable interventions. Indeed, once Trump won the presidential election on 5th November 2024, the Swiss Franc gained against the Euro, but those gains have since been erased with the Franc weakening against the Euro. The President of SNB said on Thursday, “Switzerland is not a currency manipulator; past interventions were necessary to maintain price stability”. This statement analysts suggest is to remind Trump that during his first term, Switzerland was branded a currency manipulator.

Experts in this arena suggest that the decision to cut interest rates is to contain market pressure, and to stop the Swiss Franc from strengthening thus lowering import costs which would impact negatively on inflation. SNB President Schlegel said, “the outlook for inflation is currently very uncertain, with risks predominantly on the downside” SNB officials have lifted their inflation forecast from 0.30% to 0.40% for 2025 and 0.80% in 2026 and 2027. SNB also confirmed that during the last quarter, Switzerland’s economy enjoyed its strongest expansion and, as a result, still expects the economy to grow between 1.005 to 1.50 % in 2025. Once again Donald Trump’s tariffs and other policies both domestic and international seem to heavily weigh on policymakers’ decisions at central banks.

Bank of England Holds Interest Rates Steady

Written by IntaCapital Swiss on . Posted in News & Reports. Leave a Comment

On Thursday, 20th March 2025 the BOE (Bank of England) held interest rates steady at 4.50%. Officials from Threadneedle Street warned that the bank was grappling with major uncertainties over the British and world economies and warned financial markets not to assume there would be interest rate cuts over the next few meetings. The MPC (Monetary Policy Committee) voted 8–1 to leave interest rates unchanged apart from Swati Dhingra (external member) who voted for a 25 basis point cut.

The vote of 8–1 by the MPC indicates a more hawkish stance, with both experts and analysts expecting a 7–2 vote, though most agreed that holding interest rates this time round was a shoe-in. Indeed, in the run-up to Thursday’s rate decision, some of the most dovish members of the MPC had already adopted a more cautious tone regarding interest rates.

A number of experts agreed that Thursday’s decision to keep interest rates on hold was strengthened by the banks’ increased uncertainty over domestic issues, plus April’s increases in energy and labour costs. In the bond markets, 10-year gilts rose as traders pulled back on bets on future rate cuts whilst the pound remained weaker against the US Dollar at circa $1.297.

The Bank of England is the latest central bank to adopt a more hawkish and wary tone in the face of President Donald Trump’s tariffs attacks on the United States’ closest allies. Indeed, the Governor of the Bank of England said, “Officials are having to react to fast-moving global events, with effects on inflation and growth far from certain”. He went on to say, “We have to be quite careful how we calibrate our response because we are still seeing a very gradual fall in inflation”. He also added that BOE officials were still waiting to see what the effects are of any tit-for-tat skirmishes on the tariff front.

The aura of uncertainty pervading from Threadneedle Street suggests that interest rates will remain static for the next two meetings, especially as experts suggest pay growth will be a key ingredient to future rate decisions by the MPC. Data produced on Thursday morning showed wage growth holding at a nine month high accompanied by a resilient labour market. However, minutes released by the MPC showed members as being not too worried about the strong pay data, though the minutes added that members would keep a close eye on wage settlements. However, whatever financial, employment, wages and inflation data is forthcoming, the spectre of Donald Trump’s tariffs and economic policies will loom large over many central banks’ policy decisions.

Federal Reserve Holds Interest Rates Steady

Written by IntaCapital Swiss on . Posted in News & Reports. Leave a Comment

On Wednesday, 19th March 2025, the Federal Reserve announced they were holding their benchmark interest rates steady at 4.25% – 4.50%. The FOMC (Federal Open Market Committee) voted 8 – 1 in favour of keeping interest rates steady, with the dissenting voice belonging to Christopher J. Waller, who has been a member of the Board of Governors since December 18, 2020. It appears that members are concerned that inflation could remain stubbornly high whilst at the same time the economy could be slowing.

The Chairman of the Federal Reserve, Jerome Powell, confirmed that the significant policy changes attributed to President Trump were the main reason for the Fed’s high degree of uncertainty in regard to the U.S. economy. However, he went on to say that Federal Reserve officials will certainly wait for greater clarity on the impact of President Trump’s policies, before making any definite changes to borrowing costs.

Policymakers still suggest that further interest rate cuts will be necessary, with financial markets pricing in two further cuts, totalling 50 basis points in 2025 and a number of traders suggesting that there is a 62.1% of a further interest rate cut in June this year. Officials further marked down their outlook for inflation and growth and see the economy accelerating by just 1.7% this year, down from 2.1% as advised by their last projection in December 2024.

On the inflation front, Fed policymakers advise that inflation has remained elevated since Donald Trump was elevated to the Presidency and have raised their average estimate for core inflation (does not include food and energy prices) for 2.5% to 2.8% for year end 2025.

They also increased their estimate for the end of 2025 from 4.3% to 4.4%, whilst confirming that consumer confidence had gone south, resulting in softening spending figures.

It is expected that the Federal Reserve’s interest rate decision will incur the wrath of President Trump, who has repeatedly suggested that he should have a role in interest rate decisions. Indeed, he announced to the world in January 2025, at the World Economic Forum in Davos, “With oil prices going down, I’ll demand interest rates drop immediately, and likewise they should be dropping all over the world”.

Experts suggest that in the coming months, President Trump will certainly try and get a firm grip on the Federal Reserve as he will wish to exert his influence on interest rate decisions. Indeed since the inauguration of President Trump on January 20th 2025, the Federal Reserve has held two meetings where the decision was to hold interest rates steady, with the first meeting in January bringing an end to a run of three consecutive interest rate cuts.

In the run up to the presidential election on November 5th 2024, Trump announced he would not fire Jerome Powell, but with two interest rate holds two months into the Presidency we will have to wait and see. However, a President only has the power to appoint a Fed chairman, he cannot fire the chairman unless he has “cause” as per the Federal Reserve Act. In other words, President Trump cannot fire Chairman Powell over policy disagreements, but Trump being Trump he may find a way to get what he wants.

The European Central Bank Cuts Interest Rates March 2025

Written by IntaCapital Swiss on . Posted in News & Reports. Leave a Comment

On Thursday 6th March 2025 and for the sixth time since June 2024, the ECB (European Central Bank) cut interest rates by a ¼ of 1% (25 basis points) to 2.5%. The ECB’s Governing Council released a statement saying, “The disinflation process is well on track, inflation has continued to develop broadly as staff expected, and the latest projections closely align with the previous inflation outlook”. The vote by the governing council was unopposed except for Austria’s Robert Holzmann who abstained. The ECB now sees inflation averaging 2.3% in 2025, 1.9% in 2026, and 2.0% in 2027. 

Experts suggest that the ECB’s thoughts on interest rates is not as clear cut as it was a few weeks ago as there is increased geopolitical uncertainty plus a large fiscal stimulus looming large on the horizon. As President Trump withdraws backing for Ukraine, the President of the European Union, Ursula von der Leyen, suggested that the funds needed to rearm Europe could easily reach as much as Euros 800 Billion. Experts suggest that such an outlay could well have implications for economic expansion, and inflation. 

The President of the ECB noted that the risk to economic expansion was still leaning towards the downside. However, the President pointed out that increased defence spending should give the economy a lift after President Trump turned against Europe and Ukraine leaving the Europeans to drive forward their own defence and that of the Ukraine. The President also went on to say that the ECB would be even more data-dependent and said that they would pause quantitative easing should the data/numbers suggested that was needed in order to hit their inflation target of 2%. 

At their next policy meeting in April, it would appear that bank officials are heading for a showdown over interest rate cuts and are preparing for some difficult negotiations. Interestingly, the doves on the governing council appear to see little reason to pause, whilst the hawks feel they should hold interest rates to study the implications of increased European defence spending and the on-going up-coming geopolitical risks. 

Experts suggest the financial markets are also undecided with traders and investors feeling that the upcoming defence outlays will fan inflation and push economic expansion. One financial expert said that in the Euro bloc there is an expectation of higher growth rates and a slowdown in the disinflationary process. This will reduce the scope for further interest rate cuts at the next meeting of the ECB in April and the rhetoric of President Lagarde shows she is sitting on the fence as to whether or not there will in fact be an interest rate cut. There is also the spectre of tariffs from President Trump which undoubtedly clouds the thinking of officials.

Head office

IntaCapital Swiss SA,
Rue du Rhône 80 - 84,
CH - 1204 Genève,
Switzerland

Other facilities

Enquire

Legal

IntaCapital Switzerland | Copyright © 2025 | All Rights Reserved