40 Mins Ago
UK inflation fundamentals do not support more than one additional hike: Berenberg
U.K. inflation unexpectedly accelerated on Wednesday, but the headline figure “overstates the underlying inflation problem by a huge margin,” Berenberg’s senior economist, Kallum Pickering, said in a note.
Energy and food prices, key drivers of inflation since late 2021, remain far higher than before Russia’s full-scale invasion of Ukraine in February 2022, Pickering wrote. But he added that wholesale gas prices and agricultural commodities have fallen this year, and base effects will wash out over the next 12 months, settling U.K. inflation at its underlying trend rate.
A wage-price spiral remains a risk rather than a likely scenario, he continued.
While markets have priced-in a near-guarantee of a 25 basis point hike from the Bank of England on Thursday, “fundamentals do not strongly support more than one additional hike,” according to Pickering.
BoE policy-setters will be less focused on market expectations than on conversations they have had with banks over future lending behavior, he added, with any signs of caution and liquidity hoarding potentially leading them to pause.
That leaves open the possibility they will leave rates where they are today and keep the door open to another hike in May, Pickering said.
— Jenni Reid
7 Hours Ago
Bill Ackman warns bank deposit outflows could accelerate
Billionaire investor and CEO of Pershing Square Bill Ackman warned in a tweet bank deposit outflows could accelerate after Treasury Secretary Janet Yellen said the FDIC was not considering expanding bank deposit guarantees beyond its current limit of $250,000.
Yellen’s comments led to a drop in regional bank shares in the U.S.
“I would be surprised if deposit outflows don’t accelerate effective immediately,” Ackman wrote in his tweet.
In a separate tweet, Ackman said that he fears markets are “heading for another train wreck,” adding that he hopes regulators will “get this right.”
“The longer this banking crisis is allowed to continue, the greater the damage to smaller banks and their ability to access low-cost capital,” he said.
– Jihye Lee
7 Hours Ago
CNBC Pro: Morgan Stanley just upgraded a global energy stock it says has ‘significant’ potential for growth
Morgan Stanley upgraded the shares of a European energy firm — and also raised its price target for the stock.
According to the bank, it has “one of the strongest balance sheets” and is “close to debt-free.”
CNBC Pro subscribers can read more here.
— Weizhen Tan
14 Hours Ago
Fed raises interest rates 25 basis points
The Federal Reserve hiked its benchmark interest rate by another 25 basis points, in line with Wall Street’s predictions.
This marks the central bank’s ninth hike since it began raising rates in March 2022, as well as its first announcement following the recent fallout in the banking sector. The increase takes the benchmark federal funds rate to a target range between 4.75%-5%.
The Federal Open Market Committee said in a post-meeting statement that it “will closely monitor incoming information and assess the implications for monetary policy.” Fed projections call for just one more hike this year.
— Hakyung Kim
7 Hours Ago
CNBC Pro: This e-commerce stock has a whopping 300% upside, according to Morgan Stanley
E-commerce growth is back, and Morgan Stanley has several stock picks for investors to cash in, including a less obvious name it says has huge upside.
Pro subscribers can read more here.
— Zavier Ong
3 Hours Ago
European markets: Here are the opening calls
European markets are heading for a negative open Thursday as investors digest the latest rate hike by the U.S. Federal Reserve and comments from Fed Chair Jerome Powell.
The U.K.’s FTSE 100 index is expected to open 20 points lower at 7,538, Germany’s DAX 54 points lower at 15,160, France’s CAC 37 points lower at 7,092 and Italy’s FTSE MIB down 102 points at 25,928, according to data from IG.
In Europe Thursday, the Bank of England will also be announcing its latest interest rate decision. The monetary policy committee’s meeting comes a day after data was released showing U.K. inflation rose unexpectedly in February. Many analysts expect a 25 basis point hike.
— Holly Ellyatt
