Key Central Banks Keep Interest Rates Stable

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A slew of interest rate data was released last week, and as widely expected, key central banks kept their rates unchanged to continue supporting the economic recovery in each nation. The South African Reserve Bank (SARB) kept its benchmark repo rate unchanged at a record low of 3.50%. The bank reiterated its commitment to keep financial conditions supportive for credit demand until the economy fully recovers. Following the announcement, the rand strengthened against major global currencies, trading at R14.59/$, R20.05/£ and R17.12/€ at 15h30 on 23 September 2021.

The previous evening the US Federal Reserve also kept rates steady . However, the bank indicated that it "would likely begin reducing its monthly bond purchases as soon as November and signalled interest rate increases may follow more quickly than expected," Reuters reported.

Other central banks decided the following:

While the number of Americans filing for unemployment benefits rose more than expected for the second consecutive week on Thursday, Wall Street still traded in the green at 18h15. Most economists agreed the increase was less likely due to the Delta variant and perhaps the devastation caused by Hurricane Ida and Californian wildfires.

"The four-week moving average of claims, considered a better measure of labour market trends as it irons out week-to-week volatility, fell 750 to 335 750 last week. That was the lowest level since mid-March 2020 when mandatory closures of nonessential businesses were enforced when the nation was slammed by the first wave of coronavirus cases. Claims have dropped from a record 6.149 million in early April 2020, but still remain above the 200 000 to 250 000 range that is viewed as consistent with healthy labour market conditions," Reuters added.

Markets in Europe and Asia also rose as concerns over the indebted Chinese property developer Evergrande abated. The expectation of sooner-than-expected hikes to interest rates boosted risk appetite, which caused the price of gold to drop by 1%.

PSG Wealth Daily Investment Update, 27 September 2021

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