Latest fraudulent alert - last updated on Apr 2023. To find out more information and how to protect yourself, please click here.

Investment Institute

Take Two: Fed and Bank of England raise rates to 2008 highs, Japan intervenes in currency market

  • 26 September 2022 (3 min read)

What do you need to know?

The US Federal Reserve and Bank of England raised interest rates to their highest levels since the 2008 financial crisis as they sought to tackle inflation. The Fed’s third consecutive 75-basis-point (bp) hike took rates to 3%-3.25% and markets fell on the news. The so-called ‘dot plot’ chart of officials’ rate expectations signalled more to come, with a median forecast of 4.4% by the end of 2022, compared to June’s forecast of 3.4%, and reaching 4.6% next year. The Fed’s 2022 GDP forecast was cut to 0.2% from 1.7% in June. The Bank of England raised rates by 50bp to 2.25%, its seventh consecutive increase. It expects the economy to contract by 0.1% in the third quarter (Q3), which would put the UK into a technical recession.

Around the world

Japan intervened in currency markets for the first time since 1998, buying yen to help arrest a sharp decline – earlier this month the yen fell to a 24-year low against the US dollar. Vice Finance Minister for International Affairs Masato Kanda called the move “decisive action” – the yen rose around 2% against the dollar as reports filtered into markets. The decision came after the Bank of Japan bucked the trend among central banks and stuck with ultra-low interest rates at -0.1%. It also confirmed its pledge to leave rates at “present or lower levels”.

Figure in Focus: $93

Oil prices were volatile during the week, buffeted by contrasting news flow. Brent crude moved as high as $93 on Wednesday as Russia announced a planned partial mobilisation that would potentially add 300,000 more soldiers on the ground in Ukraine. That momentum was supported by anticipation of rising Chinese demand for crude oil, with freight rates to China of crude from the US and Middle East reaching a two-year high. The Fed’s rate hike, however, helped to moderate gains, with fears about US gasoline demand pushing the price back close to $89. Brent was trading at around $90 on Friday morning, little changed over the week.

Words of Wisdom:

Digital Euro: The prospect of an electronic form of the euro, initiated by the European Central Bank (ECB) and various other national central banks to help digitalise the European economy. The digital euro would be designed to be a risk-free and stable form of payment with the aim of improving accessibility. The initiative is still in the early stages, testing the potential impact it might have on legislation and the financial sector. The ECB has selected five companies to take part in a prototyping exercise which will determine the eventual user interfaces. The results of that exercise will be published in early 2023.

What’s coming up?

Germany releases its September Ifo business climate index on Monday, while a series of US home sales and prices data are announced on Tuesday. On Wednesday, the Bank of Japan publishes the minutes from its latest monetary policy meeting. A final reading for Q2 US GDP growth is released on Thursday, as are several Eurozone measures, including the latest consumer confidence, industrial and economic sentiment indices. On Friday updated Eurozone inflation and unemployment numbers are reported, while the Reserve Bank of India meets to decide on interest rates.

Related Articles


Pesky Data

  • by Gilles Moëc
  • 19 February 2024 (10 min read)

Deferred Confidence

  • by Gilles Moëc
  • 05 February 2024 (10 min read)

Risk Asymmetry

  • by Gilles Moëc
  • 08 January 2024 (10 min read)


    This website is published by AXA Investment Managers Asia Limited (“AXA IM HK”), an entity licensed by the Securities and Futures Commission of Hong Kong (“SFC”), for general circulation and informational purposes only. It does not constitute investment research or financial analysis relating to transactions in financial instruments, nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy, sell or enter into any transactions in respect of any investments, products or services, and should not be considered as solicitation or investment, legal, tax or any other advice, a recommendation for an investment strategy or a personalised recommendation to buy or sell securities under any applicable law or regulation. It has been prepared without taking into account the specific personal circumstances, investment objectives, financial situation, investment knowledge or particular needs of any particular person and may be subject to change at any time without notice. Offering may be made only on the basis of the information disclosed in the relevant offering documents. Please consult independent financial or other professional advisers if you are unsure about any information contained herein.

    Due to its simplification, this publication is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee such opinions, estimates and forecasts made will come to pass. Actual results of operations and achievements may differ materially. Data, figures, declarations, analysis, predictions and other information in this publication is provided based on our state of knowledge at the time of creation of this publication. Information herein may be obtained from sources believed to be reliable. AXA IM HK has reasonable belief that such information is accurate, complete and up-to-date. To the maximum extent permitted by law, AXA IM HK, its affiliates, directors, officers or employees take no responsibility for the data provided by third party, including the accuracy of such data. This material does not contain sufficient information to support an investment decision. References to companies (if any) are for illustrative purposes only and should not be viewed as investment recommendations or solicitations.

    All investment involves risk, including the loss of capital. The value of investments and the income from them can fluctuate and that past performance is no guarantee of future returns, investors may not get back the amount originally invested. Investors should not make any investment decision based on this material alone. 

    Some of the services listed on this Website may not be available for offer to retail investors.

    This Website has not been reviewed by the SFC. © 2023 AXA Investment Managers. All rights reserved.