Nov 4, 2022
November 2 EST, the Federal Reserve opened its sixth interest rate hike of the year and raised rates for the fourth time by 75 basis points. Currently, the US benchmark interest rate has been as high as the 3.75%-4% level range. It is a dollar tightening not seen since the financial crisis in 2008 and the fastest tightening of US monetary policy in 40 years. This monetary tightening by the Federal Reserve in the name of curbing US inflation has not been able to curb the high US inflation.
The US consumer price index has exceeded 8% for seven consecutive months and is at a 40-year high. In response, although Fed Chairman Jerome Powell hinted that he might slow down rate hikes at the end of the year or in February next year. But he also stressed that it was too early to consider pausing interest rate hikes. In other words, slowing down interest rate hikes does not mean not raising rates, and the Fed vowed to raise rates to the end.
Immediately after, on November 3, the CME Group’s FedWatch tool predicted that the probability of the Fed raising rates by 50 basis points in December was 56.8%, and the probability of raising rates by 75 basis points was 43.2%. This would mean that the benchmark interest rate in the US could be as high as at least 4.25%-4.5% by the end of this year, possibly even touching the rare level of 4.5%-4.75%.
Saudi Crown Prince Mohammed bin Salman has expressed his desire to join the BRICS. And before that, for the US proposed anti-OPEC (NOPEC) bill intended to call a halt to the Saudi-led OPEC’s right to global oil discourse, Saudi Arabia directly declared that if this bill is passed, it will tear up the petrodollar agreement and settle oil in a non-dollar currency instead. Since 2020, the Saudis have sold off a cumulative 35% of their US treasury bonds. Clearly, the Saudi backlash against the Federal Reserve, the dollar and the US economy has risen to a strategic level.Show less
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