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Interviewed by Dubai TV, Mohammed Hashad, Head of Research and Development Department at Noor Capital and member of the US Society of Technical Analysts, commented on the latest developments of the financial markets; and most notably oil and the upcoming Fed’s policy decision.
Fed
Hashad said US Federal Reserve Governor Jerome Powell thought high inflation rates were temporary. Still, over the past three months, his view has changed as he stated that inflation would continue to rise and the Fed would raise interest rates in response to that rise.
We are witnessing a rise in the annual inflation rate to the level of 8.6%, which is the highest level in forty years. Therefore, Hashad believes that the Fed will continue to raise interest rates, and we may see more unprecedented measures in the markets. Still, hiking interest rates is not a magic wand that can push inflation back, we may witness more interest rate hikes and we may also witness a rise in tax rates.
It is also likely to force the major US banks to raise the statutory reserve to reduce consumption, and we may also see the Federal Reserve resort to open market operations through buying and selling securities.
Expectations indicate that the Bank of England will raise the interest rate at its meeting this week for the fifth time in a row this year by 20 basis points as part of the central banks’ attempts to tighten monetary in order to tackle inflation.
Hashad believes that the Bank of England will continue to raise interest rates to catch up with the major central banks, led by the US Federal Reserve.
Bitcoin
Hashad explained that Bitcoin has fallen in addition to the decline in the market value, which is witnessing clear pressure, as a result of investors reverting back to the US dollar as one of the high-return assets now.
There was also news that the issuers of Bitcoin borrowing stopped those operations, withdrawals, and financing, which caused a shock to the cryptocurrency.
Accordingly, Hashad expects a further decline to the 20 thousand levels.