At the end of its two-day monetary policy meeting on Wednesday, the Federal Reserve held its benchmark interest rate at its current 22-year high as it seeks to control inflation, which had recently reached near-record levels.
The Fed’s rate target range remains 5.25-5.5 per cent. In a press conference at the end of the meeting, Fed chair Jerome Powell said it is still unclear whether overall financial conditions were yet restrictive enough to overcome inflation that is still considered to be far above the central bank’s two per cent target.
Separately, on Thursday, the Bank of England also left interest rates on hold for the second meeting in a row, as the bank’s Monetary Policy Committee decided to leave interest rates at 5.25 per cent, a 15-year high. This follows the 14 increases in borrowing costs from December 2021 to August this year, as the bank attempts to contain soaring consumer prices.
Meanwhile, manufacturing activity in the eurozone took a further plunge last month in a broad-based downturn. Survey results by Hamburg Commercial Bank (HCOB) showed last week that new factory orders in the currency block saw one of their steepest falls since the data series began in 1997.
The HCOB manufacturing Purchasing Managers’ Index, or PMI, fell to a three-month low of 43.1 in October from 43.4 in September. The score was slightly above the initial reading of 43.0. The index has remained below the 50.0 mark that separates expansion from contraction for the 16th straight month, indicating a sustained contraction in the sector.
On a country level, Germany, Europe’s largest economy, bucked the general trend, posting a five-month high, though it still remains in contractionary territory with a reading of 40.8. On the other hand, France hit a 41-month low at 42.8.
Confidence among American consumers declined amid persistent worries about inflation, higher borrowing costs and the political environment
Finally, confidence among American consumers declined for a third consecutive month in October amid persistent worries about inflation, higher borrowing costs and the political environment, a survey showed on Tuesday.
The Conference Board, a business research group, said that its consumer confidence index, which measures consumers’ assessment of current economic conditions and their outlook for the next six months, retreated to 102.6 in October from 104.3 in the prior month.
Dana Peterson, chief economist at the Conference Board, said October’s decline came as “consumers continued to be preoccupied with rising prices in general and for grocery and gasoline prices in particular”.
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