Wednesday / September 21

Wednesday / September 21

FOMC meeting

US Federel Reserve officials are expected to raise interest rates by another 75 basis points on Wednesday when they finish their two-day Federal Open Market Commission meeting.

Forecasts surpass previous expectations of a half-point hike after last month’s inflation report came in surprisingly higher.

Many market wacthers do not rule out a full percentage point rise. 

Fed Chair Jay Powell is set to speak at 2:30 PM US eastern time, half an hour after the decision announcement.

The Fed has been lifting rates for seven months now. Neutral is considered to be the interest rate level where Fed policy is no longer easy but not yet restrictive. The Fed has considered 2.5% to be neutral, and if it raises by three-quarters of a point, the fed funds rate will be in a range of 3% to 3.25%.

US, West condemns pro-Russia referanda

US National Security Adviser Jake Sullivan said Washington rejected any referendums "unequivocally," by four pro-Moscow Ukrainian regions to hold referendums on joining Russia in coming days.

Sullivan said Washington was aware of reports that Putin might be considering ordering a mobilisation, which Sullivan said would do nothing to undermine Ukraine's ability to push back Russian aggression.

The European Union, UK and Canada also condemned the plan.

"We know that these referenda will be manipulated. We know that Russia will use the sham referenda as a basis to purportedly annex these territories either now or in the future. Let me be clear: If this does transpire the United States will never recognize Russia's claims," Sullivan said.

Secretary of State Antony Blinken slammed the Kremlin’s attempt for referanda. “The sham referenda and the potential mobilization of additional forces isn’t a sign of strength. On the contrary, it’s a sign of weakness, it’s a sign of Russian failure,” he said.

Sanctions on Russian oil

Democratic and Republican senators on Tuesday proposed that US President Joe Biden's administration use secondary sanctions on international banks to strengthen a price cap G7 countries plan to impose on Russian oil over Moscow's invasion of Ukraine.

Democratic Senator Chris Van Hollen and Republican Senator Pat Toomey announced a framework for legislation to impose the secondary sanctions, which would target financial institutions involved in trade finance, insurance, reinsurance and brokerage of Russia oil and petroleum products sold at prices exceeding the cap.

Both senators are members of the Senate Banking Committee, which oversees sanctions policy. The duo said the ability to target banks would make it harder for Russia to evade the price cap through deals with countries not formally participating in the G7 scheme.

Wall Street

Wall Street ended Tuesday lower as the US Federal Reserve is expected to go for another large interest rate hike.

The Dow Jones Industrial Average fell 313.45 points, or 1.01%, to 30,706.23, the S&P 500 lost 43.96 points, or 1.13%, to 3,855.93 and the Nasdaq Composite dropped 109.97 points, or 0.95%, to 11,425.05.

All of the 11 major S&P sectors declined, with economy-sensitive real estate and materials dropping most by 2.6% and 1.9% respectively.

Ford Motor stock tumbled over 12% after the automaker said inflation-related costs would be $1 billion more than expected in the current quarter and that parts shortages had delayed deliveries.

The Ford stock ended at $13.09, making its percentage decline for the session its largest since January 2011.

Canada opens up

Canada's federal government will likely drop its COVID-19 vaccine requirement for people entering Canada at the end of the month.

A government source not authorized to speak on the record, said Tuesday Prime Minister Justin Trudeau was "likely" to drop the vaccination requirement on September 30.

The Globe and Mail newspaper reported that Canada will also drop random coronavirus testing on the same day.