Investment Institute
Weekly Market Update

Take Two: Fed keeps interest rates on hold; global GDP growth expected to slow

  • 25 September 2023 (3 min read)

What do you need to know?

The Federal Reserve (Fed) left its benchmark interest rate unchanged at between 5.25% and 5.50% at its meeting last week. While officials were all in agreement to keep rates on hold, the Fed’s ‘dot plot’ – the chart of officials’ rate expectations – shows one more hike is expected this year. The Fed described recent economic activity as “solid” and noted that jobs growth had slowed but remains strong. Elsewhere, the Bank of England surprised by keeping interest rates at 5.25%, following an unexpected fall in inflation in August to 6.7% from 6.8% in July.

Around the world

Global economic growth is expected to slow to 3.0% this year from 3.3% in 2022, with stronger than expected performance in the US moderating the impacts of China’s weakening economy, according to the Organisation for Economic Co-operation and Development (OECD). However, this is an improvement on the 2.7% growth it forecast in June. In its Interim Economic Outlook, the OECD said it expects growth in 2024 to be 2.7% - down from its previous prediction of 2.9% - as the longer-term effects of tighter monetary policy materialise. Inflation is expected to ease throughout 2023 and 2024 but remain far above central bank objectives in most economies.

Figure in focus: 5.2%

The Eurozone’s annual inflation figure for August was revised lower to 5.2% from an initial estimate of 5.3%, after 5.3% in July. Eurostat, the statistical office of the European Union, said the highest contribution to price rises over the month came from services. However, core inflation, which excludes more volatile food, energy, alcohol and tobacco prices, remained in line with the flash estimate, easing to 5.3% from 5.5% in July. The European Central Bank raised its key benchmark interest rate to a record high of 4% earlier this month, aiming to return inflation to its 2% target.

Words of wisdom

Planetary boundaries: A term which defines critical processes and their limits in the maintenance of a stable and resilient Earth system. A study by a group of scientists including from the Potsdam Institute for Climate Impact Research, published this month, outlines nine boundaries: Climate change; biosphere integrity; land system change; freshwater change; biogeochemical flows; ocean acidification; atmospheric aerosol loading; ozone depletion; and novel entities. Researchers revealed the Earth is beyond the “safe operating space” in six of the nine areas and pressure in all of them is increasing. However, rehabilitation is still feasible in all nine areas, the study said.

What’s coming up

On Monday, Germany releases its Ifo Business Climate index for September, a closely watched indicator of the country’s economic health. On Wednesday, the Bank of Japan publishes the minutes from its latest monetary policy meeting. On Thursday, a series of Eurozone surveys covering September are issued, including the bloc’s Economic and Industrial Sentiment measures. In addition, Germany’s preliminary estimate for September inflation is released, as well as the final estimate for US second quarter (Q2) GDP growth. On Friday, Japan reports its unemployment rate for August while the Eurozone releases its flash estimate for September inflation and the UK reports the final estimate of Q2 GDP.

Related Articles

Weekly Market Update

Take Two: US inflation eases; France to begin new parliamentary session

  • by AXA Investment Managers
  • 12 July 2024 (3 min read)
Weekly Market Update

Take Two: US GDP revised up; Canada inflation unexpectedly rises

  • by AXA Investment Managers
  • 01 July 2024 (3 min read)
Weekly Market Update

Take Two: BoE holds interest rates as inflation falls to target; Japan exports rise

  • by AXA Investment Managers
  • 24 June 2024 (3 min read)


    This website is published by AXA Investment Managers Australia Ltd (ABN 47 107 346 841 AFSL 273320) (“AXA IM Australia”) and is intended only for professional investors, sophisticated investors and wholesale clients as defined in the Corporations Act 2001 (Cth).

    This publication is for informational purposes only and does not constitute investment research or financial analysis relating to transactions in financial instruments, nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities.

    Market commentary on the website has been prepared for general informational purposes by the authors, who are part of AXA Investment Managers. This market commentary reflects the views of the authors, and statements in it may differ from the views of others in AXA Investment Managers.

    Due to its simplification, this publication is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee forecasts made will come to pass. Data, figures, declarations, analysis, predictions and other information in this publication is provided based on our state of knowledge at the time of creation of this publication. Whilst every care is taken, no representation or warranty (including liability towards third parties), express or implied, is made as to the accuracy, reliability or completeness of the information contained herein. Reliance upon information in this material is at the sole discretion of the recipient. This material does not contain sufficient information to support an investment decision.

    All investment involves risk , including the loss of capital. The value of investments and the income from them can fluctuate and investors may not get back the amount originally invested.