Global Courant
ISTANBUL
Despite the inflation and recession dilemma, the strong trend in commodity demand continued last week with the effect of China’s interest rate cut and weak dollar demand.
The Fed did not change the fed funds rate for the first time since January 2022, after raising interest rates by 500 basis points in 10 meetings from March 2022 to this May.
“Almost all committee participants think it would be appropriate to raise interest rates a little more by the end of the year,” Fed Chairman Jerome Powell said at a press conference after the meeting.
On the other hand, the European Central Bank (ECB), stating that it will remain “too high for too long” despite the downward trend in inflation, increased the three main policy rates by 25 basis points.
This was the eighth consecutive rate hike, even as the eurozone economy fell into a minor recession in the first quarter of this year.
The People’s Bank of China also lowered its medium-term lending rate – the one-year loan interest rate (LPR) – for the first time in 10 months as the post-COVID recovery lost momentum.
The rate was reduced by 10 basis points to 2.65%, the first cut since August 2022.
Meanwhile, the central bank unexpectedly cut its short-term policy rate – the 7-day reverse repo rate – by 10 basis points from 2% to 1.9%.
The Bank of Japan decided to keep interest rates at ultra-low levels on Friday and left the yield curve control program unchanged, meeting economists’ expectations.
After the two-day meeting, the short-term interest rate target was kept at -0.1, while the 10-year bond yields were kept at around 0 percent.
The central bank maintained its view that the annual rise in consumer prices would slow in the coming months.
While the Bank of England’s interest rate decision is scheduled to be announced this week, Fed Chairman Powell’s statements are also expected to affect the commodity market.
Gold prices fell 0.2%, silver prices 0.4% and platinum prices 2.6%, while palladium gained 6.7% last week.
Copper rose 3%, lead 6.2%, aluminum 0.2%, nickel 9.5% and zinc 3.1%.
Wheat traded on the Chicago Mercantile Exchange rose 11.3%, corn rose 12.7%, soybeans fell 3.2% and rice fell 6.5%.
On the Intercontinental Exchange (ICE), the price of cotton fell by 2.1% and the price of coffee by 3.2%, while the price of sugar rose by 2.4% and the price of cocoa increased by 1.9%.
Cocoa hit its highest level since December 2015 at $3,271.
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