- USDTHB: moving in the range 34.53-34.57 this morning supportive level at 34.40 resistance level at 34.70
- SET Index: 1,399.0 (+0.24%), 18 Dec 2024
- S&P 500 Index: 5,872.2 (-2.99%), 18 Dec 2024
- Thai 10-year government bond yield (interpolated): 2.272 (-3.16 bps), 18 Dec 2024
- US 10-year treasury yield: 4.50 (+10.0 bps), 18 Dec 2024
- Fed lowers rates by a quarter point and signals two cuts in 2025
- Powell signals the Fed's renewed focus on inflation
- UK inflation jumps to eight-month high ahead of BOE decision
- Thailand keeps key rate unchanged, citing increasing uncertainties
- Dollar index reaches two-year peak following Fed's rate cut
Fed lowers rates by a quarter point and signals two cuts in 2025
The Federal Reserve cut rates by 25 basis points to 4.25-4.5%, with an 11-1 vote, and Hammack dissenting. The statement remained mostly unchanged, but now mentions considering the "extent and timing" of future rate hikes, signaling slower easing ahead. The updated Summary of Economic Projections (SEPs) showed higher 2025 and 2026 Federal Funds Rate projections, with the 2025 median rising to 3.9% (from 3.4%) and the 2026 median to 3.4% (from 2.9%). Core PCE inflation is now expected at 2.5% in 2025 and 2.2% in 2026. Powell also noted that some policymakers had started considering the potential impact of higher tariffs from President-elect Trump, but emphasized that the effects of such policies were highly uncertain.
Powell signals the Fed's renewed focus on inflation
Chair Jerome Powell made it clear that the central bank's year-end inflation projection has "kind of fallen apart." Officials now anticipate it will take much longer for inflation to reach their 2% target, which has been missed for nearly four years. As a result, Powell emphasized that any adjustments will depend on further progress in reducing inflation. This shift toward prioritizing inflation is a departure from September, when officials viewed labor market softening as the greater risk.
UK inflation jumps to eight-month high ahead of BOE decision
UK inflation rose for the second consecutive month, with November CPI increasing 2.6% year-on-year, up from 2.3% in October, fueled by higher motor fuel and clothing prices. This puts further distance from the Bank of England's 2% target and supports expectations for the BOE to keep rates unchanged. Services inflation remained high at 5%, while goods inflation rose to 0.4%, driven by motor fuel, clothing, and processed food.
Thailand keeps key rate unchanged, citing increasing uncertainties
Thailand's central bank decided to keep its key interest rate unchanged following an unexpected rate cut in October, citing concerns over increasing future uncertainties while resisting government pressure for further easing. The MPC unanimously agreed to maintain the one-day repurchase rate at 2.25%, as anticipated. The central bank believes this rate aligns with the economic outlook and inflation, which is moving toward the target range, while also supporting economic and financial stability amid growing uncertainties ahead.
Dollar index reaches two-year peak following Fed's rate cut
The 10-year government bond yield (interpolated) on the previous trading day was 2.272, -3.16 bps. The benchmark government bond yield (LB346A) was 2.23, -3.0 bps. Meantime, the latest closed US 10-year bond yields was 4.50, +10.00 bps. USDTHB on the previous trading day closed around 34.24, moving in a range of 34.53 – 34.57 this morning. USDTHB could be closed between 34.40 – 34.70 today. The US dollar surged against major currencies after the Fed delivered a hawkish rate cut, lowering rates by 25bps as expected but raising its FFR projections, particularly for 2025. The euro fell below 1.05 due to dollar strength, with little new from ECB's Lane and Wunsch, while the EZ HICP Final Y/Y was unexpectedly revised down to 2.2%. The Japanese yen was the top performer among G10 currencies, though it still weakened, with USD/JPY rising above 154 post-Fed as rising US yields contributed to the yen's decline.
Sources : ttb analytics , Bloomberg, CNBC, Trading economics, Investing, CEIC
