Markets remained steady overnight following the Federal Reserve’s decision to leave interest rates unchanged, as widely expected. Markets have been relatively calm throughout the week as investors awaited key central bank decisions, with attention also turning to the upcoming US midterm elections. The Fed’s decision to hold rates steady keeps monetary policy on pause for now, with markets watching for signs of future rate cuts and how this could affect the US dollar.The UK announced their latest budget, highlighted by increased billions to the Ukraine and an increase ‘bank surcharge tax’ to fund it. This was well received by markets, as UK Gilts settled and the GBP, held steady above 1.3300.The RBNZ surprised markets by holding interest rates steady, with an expected rate rise, almost built into market calculations. This was met by a sell-off in the NZD, which plummeted below 0.5600, only to recover to 0.5630 overnight. The RBNZ move was influenced by softer than expected quarterly inflation numbers, released last week, and a willingness not to act before next week’s election. Australian inflation data was slightly hotter than expected, with the annualised rate jumping to 4.3%, supporting the AUD above 0.7030.
