It still appears to be all about consumer price growth at European Central Bank headquarters here in Germany’s financial capital, which means unless inflation plunges, more rate hikes are coming.

At least that’s the word from ECB President Christine Lagarde, who said the results of the latest two-day meeting of the bank’s governing council were clear: “Given our baseline…our judgement in the room is that we are not pausing – that applies today. We believe we have more ground to cover.”

Speaking at the traditional press conference following bank’s monetary policy announcement, She said the ECB will continue to use economic data to guide its strategy, and decisions will be made on a “meeting-by-meeting basis.”

Following the ECB’s move to further increase borrowing costs, markets priced in two more quarter-point rate hikes in the months ahead.

EUR/USD shed more than a half cent as the market digested the decision and the bank’s comments and flirted with a 1.09 handle during Lagarde’s comments. (LiveSquawk - Continue Reading)

In what was a fairly well-trailed event, the Federal Reserve’s rate setters announced what many believed ahead of the announcement to be the 10th and likely peak of the current cycle.  

As widely expected, the FOMC increased its main interest rate by 25 basis points to a range of 5.0-5.25%, in what was a unanimous vote by members.

The ensuing statement omitted the reference to “some additional policy firming may be appropriate”, and in a nod to the regional bank issues noted that, “Tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation.” How much they ware expected to weigh was uncertain, the committee said.

Barclays’ Marc Giannoni noted that his team was surprised neither by the decision nor the change in messaging. “We expected the FOMC to indicate that it would likely pause its hiking campaign at the June meeting but that it would maintain a tightening bias, indicating additional rate increases if conditions warrant it.

“We believe today's statement did precisely that.” (LiveSquawk - Continue Reading)

A Republican plan to cut federal spending in exchange for lifting the U.S. government's debt ceiling would lower employment, slow economic growth and "meaningfully increase" the likelihood of a recession, Moody's Analytics' chief economist told a Senate committee on Thursday.

Mark Zandi told the Senate Budget Committee that U.S. GDP growth would be 1.61% in 2024 if the Republican plan were enacted, compared with 2.23% otherwise, and lead to 790,000 fewer jobs.

Republicans are pressing Democratic President Joe Biden to agree to spending cuts as a condition for raising the United States' self-imposed $31.4 trillion debt ceiling. Biden and his fellow Democrats insist Congress should raise the cap without conditions.

The standoff is already spooking investors: On Thursday the federal government paid the highest interest ever for a one-month debt issue. (Reuters - Continue Reading)

Western Alliance Bancorp denied a report that it’s exploring strategic options including a possible sale of all or part of its business.

“This story is absolutely false, there is no truth to this,” Stephanie Whitlow, Western Alliance’s chief marketing officer, said in an email.

The Financial Times reported Thursday that the Phoenix-based company has hired advisers to explore its options, citing two people familiar with the matter, adding that the bank’s deliberations were at an early stage and might not come to anything.

In a statement later in the morning, Western Alliance said it’s not exploring a sale nor has it hired an adviser to explore strategic options. The story “is categorically false in all respects. There is not a single element of the article that is true,” Western Alliance said, adding that it’s “considering all of our legal options in response to the story.” (Bloomberg - Continue Reading)