Welcome back to another Zylostar Weekly Market Update.
Last week, financial markets were driven by central bank decisions, fresh inflation data, and geopolitical developments in the Middle East. Here's what moved the markets.
🇬🇧 UK Inflation Holds Steady
According to the Office for National Statistics, UK inflation remained at 2.8% in May, unchanged from April.
• Monthly prices increased by 0.2%
• Transport costs provided the largest upward pressure
• Food and non-alcoholic beverages helped offset inflation
The bigger story lies beneath the surface:
• Goods inflation slowed to 2.0%
• Services inflation accelerated to 3.7%
This suggests inflation pressures are shifting rather than disappearing.
🇺🇸 FOMC & Dot Plot
The Federal Reserve maintained its cautious stance, with policymakers emphasizing a data-dependent approach.
• Inflation remains above target
• Officials continue to monitor geopolitical risks and energy prices
• The latest Dot Plot indicates a gradual path for future policy adjustments
Markets continue to closely watch the timing of future rate cuts.
🇬🇧 Bank of England
The Bank of England left the Bank Rate unchanged at 3.75% in a 7-2 vote.
• Two members voted for another hike to 4%
• Policymakers cited volatile energy prices and a softer labor market
• The next policy decision is scheduled for 30 July
🇯🇵 Bank of Japan
The Bank of Japan raised interest rates by 25 basis points to 1.00%.
• Decision passed by a 7-1 vote
• Wage growth remains strong
• Inflation remains above target
• Negative real rates supported further normalization
The BOJ continues moving away from ultra-loose monetary policy.
🇦🇺 Reserve Bank of Australia
The RBA held its cash rate unchanged at 4.35%.
• Policymakers paused after several hikes earlier this year
• Ongoing uncertainty remains a key concern
• Future decisions will depend on incoming economic data
🌍 Geopolitical Developments
Markets welcomed signs of easing tensions in the Middle East.
• The United States and Iran reached an agreement to reopen the Strait of Hormuz
• Formal signing is expected in Geneva on 19 June
• Iran's nuclear program remains unresolved, with a 60-day negotiation window
However, geopolitical risks remain elevated.
Israeli air strikes continued in southern Lebanon despite an overall reduction in violence following the U.S.-Iran agreement. Analysts warn that further escalation could threaten the broader ceasefire.
