FTSE slides after Fed statement, Carney rate comments

The FTSE index has lost ground on Thursday, after sustaining losses of over 1.0% on Wednesday. In the North American session, the pair is at 7,351, down 0.46% on the day. In economic news, British Construction PMI improved to 50.5, edging above the estimate of 50.4. As expected, the Bank of England maintained the benchmark rate at 0.75%. On Friday, British Services PMI is expected to rise to 50.4 points.

Central banks were in the spotlight on Wednesday and Thursday, as the Federal Reserve and BoE held their monthly meetings. The BoE maintained interest rates, but BoE Governor Mark Carney had a hawkish message (warning?) for the markets. Carney said that there could be a number of rate hikes from the bank, if Brexit is resolved and growth and inflation point higher. The markets have priced in just one rate hike until 2021. Carney’s comments didn’t make much of an impact on investors, as the pound has lost ground on Thursday.

The Federal Reserve also made no changes to the benchmark rate. The rate statement noted that inflation pressures are muted and that the FOMC would remain patient regarding future rate movements. Jerome Powell reinforced this stance at a follow-up press conference, saying “we don’t see a strong case for moving in either direction”. The Fed is already on record as saying it does not expect to raise rates before 2020, and with inflation levels persistently below the Fed’s target of 2.0%, the Fed can afford to continue its wait-and-see stance.

King Dollar Returns as Powell Sees Pickup with Inflation

Post-FOMC hangover

Economic Calendar

Thursday (May 2)

  • 4:30 British Construction PMI. Estimate 50.4. Actual 50.5
  • 7:00 BoE Inflation Report
  • 7:00 BoE Official Bank Rate Votes. 0-0-9. Actual 0-0-9
  • 7:00 BoE Monetary Policy Summary
  • 7:00 BoE Official Bank Rate. Estimate 0.75%. Actual 0.75%
  • 7:00 BoE Asset Purchase Facility. Estimate 435B. Actual 435B
  • 7:00 BoE Asset Purchase Facility Votes. Estimate 0-0-9. Actual 0-0-9
  • 7:30 BoE Governor Carney Speaks

Friday (May 3)

  • 4:30 British Services PMI. Estimate 50.4

*All release times are DST

*Key events are in bold

FTSE, Thursday, May 2 at 12:25 DST

Previous Close: 7,385 Open: 7,358 High: 7,335 Low: 7,394 Close: 7,351

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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