Weekly Digest: ECB’s Jumbo Rate Hike, Queen Elizabeth Dies at 96


3 minutes read

Sep 9, 2022

Queen Elizabeth II photographed at an official event wearing a blue suit, a blue Ceylon sapphire brooch, and a pearl necklace.

10/09/22: The ECB makes its largest ever interest rate hike, volatility grips stocks, Britain’s Queen Elizabeth dies at Balmoral aged 96. And more.

Investment news

Fed chair Jerome Powell speaking at a press conference after a Fed meeting on rate hikes aimed taming high inflation

The gold price fell after Powell hinted at another aggressive rate hike later in September to beat soaring inflation.

“Powell’s comments are entirely consistent with the Jackson Hole Conference, he’s not pushing back against market pricing for a 75 basis point increase coming at the September meeting,” said Daniel Ghali, commodity strategist at TD Securities, as quoted by Reuters.

Read our SPOTLIGHT to learn how rate hikes can affect the price of gold.

The European Central Bank’s main building in Frankfurt

The European Central Bank has raised interest rates by 75 basis points and expects further increases as inflation remains “far too high.” (CNBC)

“This major step frontloads the transition from the prevailing highly accommodative level of policy rates towards levels that will ensure the timely return of inflation to the ECB’s 2% medium-term target,” the bank said in a statement.

Read our SPOTLIGHT to see what central banks are doing to fight soaring inflation.

a black wallet with a long receipt and a blue arrow going up amid rising consumer prices and a cost-of-living crisis

Just don’t get used to it! Federal Reserve Chairman Jerome Powell said it was crucial to get inflation down before people start to see it “as the norm”. (CNBC)

“History cautions strongly against prematurely loosening policy. I can assure you that my colleagues and I are strongly committed to this project, and we will keep at it until the job is done,” he said in a speech.

stock investors in black suits concerned about the volatility in the stock market caused by economic and political uncertainty

Volatility grips stocks: the S&P 500 pushed lower after the Fed boss reaffirmed his hawkish views from the Jackson Hole conference in late August. (Bloomberg)

“Fedspeak has once again injected volatility (after all, it is September) into the rangebound environment,” wrote Julian Emanuel, chief equity and quantitative strategist at Evercore, adding that “Powell’s view that the ‘clock is ticking’ on intolerably high inflation expectations becoming part of the American consumer’s behavioral norm.”

Deutsche Bank AG strategists see U.S. stocks sliding a further 25% if the economy tips into recession. (Bloomberg)

“The outlook looks relatively binary: in the event we slide into a recession, the selloff has much further to go,” strategists said, adding that the S&P 500 could drop by as low as 3,000 points in the worst-case scenario.

A hand of Santa Claus holding an empty wallet amid soaring inflation and consumers worried about not being able to afford Christmas gifts

Inflation is a Scrooge: as inflation fears grow, over a third of Americans have started their Christmas shopping in September, a Bankrate survey found. Many are trying different money-saving strategies, such as buying fewer items or less expensive brands. (CNBC)

“Holiday shopping will look different this year with inflation around 40-year highs,” said Ted Rossman, Bankrate’s senior industry analyst.

Read our SPOTLIGHT to discover 3 easy money-saving tips.


Hawks in the ECB should be cautious of what they wish for: an overly aggressive rate hike could repeat the 2011 euro crisis. (Bloomberg)

“The last time the central bank embarked on rate hikes — under then-President Jean-Claude Trichet and on the eve of a recession — it precipitated the 2011 euro crisis from which the continent has never fully recovered,” Bloomberg’s Marcus Ashworth writes.

What else is happening

Queen Elizabeth II photographed at an official event wearing a light blue suit, a pearl necklace, and a silver brooch

Queen Elizabeth II, the UK's longest-serving monarch, has died at Balmoral aged 96, after reigning for 70 years. (Buckingham Palace)

“The Queen died peacefully at Balmoral this afternoon,” the palace said in a statement Thursday.

The Queen ascended to the throne in 1952 and witnessed enormous social change.

Her reign spanned 15 prime ministers starting with Winston Churchill and ending with Liz Truss, who was appointed by Queen Elizabeth earlier this week.

New UK Prime Minister Liz Truss photographed smiling, wearing a grey jacket and a gold necklace

Liz Truss, the new U.K. prime minister, unveiled a sweeping package of measures to reduce spiraling energy bills. (Bloomberg)

With Truss's plan, households would pay an average of £2,500 a year in energy costs, well below the £3,548 they would otherwise have paid.

And finally…

A lucky couple finds a stash of rare gold coins during home renovations: the coins, which date from 1610 to 1727, are expected to fetch as much as $288,000 at auction next month. (Smithsonian Magazine)

It's unclear how much the couple spent on their home improvement project, but the coins may offset a large chunk of that expense.


See you next week!


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