November 2023 Wrap Up

What were the key moments in the market this month?

No rate cuts on the horizon from the Fed’s notes

Federal Reserve officials discussed their recent meeting, noting a decline in inflation and deciding to keep an eye on data to ensure it continues to slow towards their 2% goal. They’ve chosen to maintain the current benchmark rate for now, suggesting a pause in further rate increases.

Although another rate hike is possible, most experts believe the Fed has completed its rate raises. If progress towards the 2% target stalls, the Fed may reconsider. This decision marks the longest break in their rate increases since March 2022, having raised rates 11 times to around 5.4%, the highest in 22 years.

Argentina’s in for a shake-up as Milei takes the reins

Argentina recently implemented a tax hike on U.S. dollar purchases directed towards savings and bank card transactions, a move aimed at protecting the country’s limited reserves. This policy adjustment involves a significant increase in the advance payment of income tax, jumping from 45% to 100%. 

In anticipation of Javier Milei’s upcoming presidency, these changes have sparked discussions about the economic reforms he plans to introduce. Milei’s proposals, such as dollarising Argentina’s economy and scrapping the central bank, have garnered attention and speculation, prompting these pre-emptive fiscal changes.

Pound under pressure as doubts cloud UK tax strategy

Traders and voters are doubtful about the impact of the UK’s proposed fiscal changes on the British pound (GBP). The recent announcement by Chancellor Jeremy Hunt, which aimed to reduce taxes and public spending, was meant to please Conservative supporters. 

However, scepticism prevails among both currency traders and a significant portion of the public regarding the effectiveness of these measures, particularly in applying economic theories to the current UK situation. This uncertainty is influencing the GBP’s fluctuation more than any actual financial results from these changes.

Turkey’s Central Bank surprises with 40% interest rates

Turkey’s central bank shocked analysts by raising its main interest rate, the one-week repo rate, by 500 basis points to 40%, twice the anticipated increase of 250 basis points. The aim was to tackle sky-high inflation, which hit 61% in October, and stabilize the weakening Turkish lira, which saw a slight boost against the dollar following the announcement. 

This decision follows a series of rate hikes amid years of persistently high inflation and a steeply devalued currency, largely due to loose monetary policies by the Ankara government. 

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