Gold stands firm as Bank of England leaves rates unchanged at 4%

Key Points:

Federal Reserve Chairman Jerome Powell addressed statutory mandates, emphasizing "moderate long-term interest rates" as derivatives of inflation stability and employment maximization at a September 18th press conference.The clarification impacts U.S. economic expectations, possibly influencing USD-denominated and crypto markets, notably BTC and ETH, as long-term rate stability shapes investment strategies.

Dual Mandate Focus: Inflation and Employment Stability

Federal Reserve Chairman Jerome Powell stressed maintaining low and stable inflation and maximizing employment as the Fed's key focuses. By clarifying that long-term interest rates derive naturally from these goals, the Fed signaled continued attention to its established dual mandate. This communication aligns with historical Fed policy.

Markets may interpret this clear stance from the Fed as maintaining a data-driven approach. USD-denominated assets, often influential on crypto, particularly Bitcoin and Ethereum, are likely to remain stable if inflation and employment targets are effectively managed. The Fed did not propose any immediate policy changes or institutional shifts directly impacting the crypto market, yet historical precedence suggests market reactions could occur indirectly.Jerome Powell, Chairman, Federal Reserve, emphasized the Fed's approach by stating, "We see that moderate long-term interest rates are the outcome of achieving low and stable inflation and maximizing employment."

Crypto Markets Remain Steady Amidst Fed Announcements

Did you know? The Federal Reserve has emphasized its dual mandate since the late 1970s, influencing asset repricings during clarified policy updates.

Bitcoin (BTC) holds a price of $116,566.10, per CoinMarketCap. The cryptocurrency's market capitalization is $2.32 trillion, while the fully diluted market cap reaches $2.45 trillion. With a 24-hour trading volume of $63.91 billion, Bitcoin saw a minor 0.12% price decline over the past day but increased by 2.17% over the last week. The cryptocurrency maintains a market dominance of 56.85%, driven by its circulating supply of 19,922,396 out of a maximum 21 million.

Bitcoin(BTC), daily chart, screenshot on CoinMarketCap at 01:34 UTC on September 18, 2025. Source: CoinMarketCap

Source: CryptoSlate

Sterling traded steadily mixed today, showing little reaction to the BoE’s decision to hold rates at 4.00%. The 7–2 vote leaned slightly dovish, with Swati Dhingra and Alan Taylor backing a 25bps cut, but the outcome was broadly expected given their well-established dovish leanings. Importantly, the MPC’s statement flagged that medium-term inflation risks remain “prominent,” sending a clear signal that policymakers are not yet comfortable opening the door to more near-term easing.

For markets, the key question is whether November will deliver a cut. On that, the announcement offered little clarity. Progress in services and core disinflation remains uneven, and policymakers may conclude there is insufficient evidence by November to justify a move.

Another complication is fiscal policy. The UK government is scheduled to present its budget in late November, and some MPC members may prefer to wait until the impact of tax and spending plans is clearer before adjusting interest rates. That raises the risk that a December or early-2026 move may be more likely.

On the broader FX board, Kiwi remains the weakest performer of the week after a sharp GDP miss fueled calls for a 50bps RBNZ cut in October. Dollar is the second weakest, as its post-FOMC bounce shows signs of fading, while Aussie sits third from the bottom after soft jobs data.

By contrast, Swiss Franc leads as the strongest performer, followed by Euro and Loonie. Yen and Sterling sit mid-table, though Yen could slide lower if U.S. and European yields extend their rebound into week’s end.

In Europe, at the time of writng, FTSE is up 0.17%. DAX is up 1.05%. CAC is up 1.04%. UK 10-year yield is up 0.039 at 4.668. Germany 10-year yield is up 0.035 at 2.709. Earlier in Asia, Nikkei rose 1.15%. Hong Kong HSI fell -1.35%. China Shanghai SSE fell -1.15%. Singapore Strait Times fell -0.26%. Japan 10-year JGB yield rose 0.008 to 1.601.

US initial jobless claims fall back to 231k, vs exp 240k

US initial jobless claims fell -33k to 231k in the week ending September 13, below expectation of 240k. Four-week moving average of initial claims fell -750 to 240k. Continuing claims fell -7k to 1920k in the week ending September 6. Four-week moving average of continuing claims fell -10k to 1933k.

BoE holds at 4.00%, two doves dissent,

BoE left its Bank Rate unchanged at 4.00% today, in line with expectations. The decision came with a slight dovish tilt, as two members of the Monetary Policy Committee—Swati Dhingra and Alan Taylor—voted for an immediate 25bps cut. The MPC also voted by 7–2 to continue reducing the stock of UK government bonds held for monetary policy purposes by GBP70 billion over the next 12 months, taking the total down to GBP488 billion.

Policymakers reiterated that a “gradual and careful” approach remains appropriate, with the timing of further easing dependent on the extent of disinflation. The statement stressed that policy is not on a pre-set course and will respond flexibly to new data.

On inflation, the Bank acknowledged progress but kept risks in focus. CPI was steady at 3.8% in August and is expected to edge slightly higher in September before trending back toward the 2% target. Wage growth has slowed from its peak and is expected to decelerate further, while services inflation has held broadly flat. Still, the BoE cautioned that medium-term upside risks remain “prominent.”, particularly if the temporary uptick in CPI feeds into wages and price-setting.

NZ economy shrinks -0.9%, bets of 50bps RBNZ cut rises

New Zealand’s economy contracted far more than expected in Q2, with GDP falling -0.9% qoq against consensus forecasts of -0.3% qoq. The release confirmed a deeper downturn, with economic activity now having declined in three of the last five quarters. The breadth of weakness points to rising headwinds that could force the RBNZ into a more aggressive easing cycle.

Goods-producing industries led the contraction with a -2.3% drop, while primary industries fell -0.7% and services output was flat. “The 0.9 percent fall in economic activity in the June 2025 quarter was broad-based with falls in 10 out of 16 industries,” said economic growth spokesperson Jason Attewell. Manufacturing was the single largest drag, contracting -3.5% in the quarter, while construction fell -1.8% following a modest rebound in Q1.

The scale of contraction triggered a wave of forecasts for deeper RBNZ easing. Westpac now expects a 50bp cut in October followed by a further 25bp reduction in November, compared with earlier projections of 25bp moves at both meetings. That would lower the OCR from the current 3.00% to 2.25% by year-end.

Australia jobs disappoint in August as employment falls -5.4k

Australia’s labor market weakened in August as total employment fell by -5.4k, against expectations for a 21.2k gain. The headline masked stark contrasts, with full-time jobs dropping by -40.9k while part-time roles increased by 35.5k. Hours worked fell -0.4% mom, underscoring signs of cooling demand for labor.

The unemployment rate held steady at 4.2% in line with forecasts, though the participation rate edged down to 66.8% from 67.0%. The data suggest that while unemployment remains low, underlying labor market conditions are softening.

GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.3588; (P) 1.3657; (R1) 1.3694; More…

Intraday bias in GBP/USD remains neutral and more consolidations could be seen below 1.3725. Further rise is expected as long as 55 D EMA (now at 1.3488) holds. Above 1.3725 will bring retest of 1.3787 high first. Decisive break there will resume larger up trend to 1.4004 projection level. However, sustained break of 55 D EMA will indicate that corrective pattern from 1.3787 is extending with another falling leg, and bring deeper fall to 1.3332 support and below.

In the bigger picture, up trend from 1.3051 (2022 low) is in progress. Next medium term target is 61.8% projection of 1.0351 to 1.3433 from 1.2099 at 1.4004. Outlook will now stay bullish as long as 55 W EMA (now at 1.3151) holds, even in case of deep pullback.

Source: ACTIONFOREX

Markets bet Fed rates will tumble below 3% next year

Source: Reuters

Former Treasury secretary Lawrence Summers said Federal Reserve policy is leaning towards being too slack, emphasising that the US economy’s biggest risks lie in inflation rather than the job market.

“My own guess is that policy is currently a little looser — looking at all financial conditions — than people view it as being,” Summers said on Bloomberg Television’s Wall Street Week with David Westin. “The balance of risks is a bit more tilted towards inflation rather than unemployment.”

Summers spoke after Fed policymakers cut their benchmark interest rate for the first time in a year. Jerome Powell, the central bank’s chair, said the decision reflected a shift in the balance of risks, with “the much lower level of job creation and other evidence of softening in the labor market” apparent in data in recent weeks.

“The biggest risk in this situation is being that we lose contact with our 2% inflation target and become a country with an inflation psychology,” said Summers, a Harvard University professor and paid contributor to Bloomberg TV.

“I think we’re a bit on the loose side with respect to monetary policy and monetary policy signalling,” Summers said. “But that’s very much a difference of degree.”

Fed governors and reserve bank presidents, in updated projections released on Wednesday, boosted their inflation forecast for next year. The median estimate shows a 3% increase in the Fed’s preferred gauge, the personal consumption expenditures price measure, for 2025, and a 2.6% rise next year — higher than the 2.4% predicted in June.

“If I were sitting in chair Powell’s shoes, my greatest concern would be very much” on the inflation side, Summers said.

The pressure from President Donald Trump and his allies on the Fed to slash interest rates underscores the need to retain credibility on fighting inflation, the former Treasury chief added.

“I don’t think they’re doing it based on political pressure,” Summers said of the Wednesday rate reduction. “But I think you have to bend over backwards at a moment like this. And I’m not sure they’ve bent over quite as far backwards as I would have liked to see.”

Source: Theedgemarkets

The UAE Central Bank on Wednesday lowered its benchmark interest rate, mimicking the US Federal Reserve’s move to cut its policy rate, the first since President Donald Trump resumed office in January.After hitting the pause button for several quarters, the rate cut comes amid mounting pressure from the White House and open criticism of the Fed from Mr Trump amid weakening US economy.The Fed lowered its benchmark rate a quarter of a percentage point, from 4 per cent to 4.25 per cent, at the end of the two-day meeting of the rate setting Federal Open Market Committee.

With the much anticipated cut in the benchmark interest rates, the US has entered the latest monetary policy easing cycle as the Fed tries to stave off a recession, quell divisions within the bank and fend off pressure from Mr Trump, who has been demanding a major rate cut to reboot growth in the world’s biggest economy.Most central banks in the six-member economic bloc of GCC move in lock-step with the Fed's policy rate moves because their currencies are pegged to the US dollar, with Kuwait the only exception in the Gulf region as the dinar is tied to a basket of currencies.The UAE Central Bank said it would cut the base rate applied to its overnight deposit facility by 25 basis points to 4.15 per cent, from 4.40, effective Thursday.

The base rate, which is anchored to the Fed's interest on reserve balances (IORB), signals the general stance of the Central Bank's monetary policy and provides an effective interest rate floor for overnight money market rates.

Strong economic fundamentals

The UAE economy, which has maintained a robust growth momentum since the coronavirus pandemic driven slowdown, grew by 3.9 per cent on an annual basis in the first quarter of 2025,Gross domestic product at the end of the three-month period rose to Dh455 billion, according to preliminary estimates released by the Federal Competitiveness and Statistics Centre earlier this month.Non-oil GDP posted 5.3 per cent rise on yearly basis, rising to Dh352 billion, contributing more than 77 per cent of total real GDP as the country continues to diversify its economy away from oil.

Non-oil contributions to GDP have risen consistently in the past five years, from 71.3 per cent level in 2020. Oil-related activities accounted for 22.7 per cent of GDP in the first three months of 2025.Non-oil private sector activity in the UAE also rose in August, with output growth and business confidence increasing in the Arab world's second-largest economy, driven by the fastest pace of activity in six months.The seasonally adjusted S&P Global UAE Purchasing Managers' Index climbed to 53.3, from 52.9 in July, partly boosted by an expansion in output levels in the third quarter.

The CBUAE expects the UAE’s GDP to expand at 4.7 per cent in 2025 and by 5.7 per cent in 2026. The country’s non-oil economy is set to grow by 5.1 per cent this year.The banking regulator estimates the country’s hydrocarbons economy to jump by 3.6 per cent in 2025 and by 8.5 per cent the following year.Inflation in the UAE stood at 1.4 per cent in the first quarter of 2025 and the central bank has slightly revised down its inflation forecast for 2025 to 1.9 per cent from 2 per cent.The UAE Central Bank has also lowered its inflation estimate for 2026 to 1.9 per cent from 2.1 per cent.

Source: THENATIONALNEWS

The number of Americans filing new applications for unemployment benefits fell last week, but the labor market has softened as both demand for and supply of workers have diminished.

Initial claims for state unemployment benefits decreased 33,000 to a seasonally adjusted 231,000 for the week ended September 13, the Labor Department said on Thursday. The decline partially reversed a surge in the prior week, which had pushed claims to levels last seen in October 2021.

That increase in applications was concentrated in Texas, with the state's Workforce Commission later saying it had since the September 1 Labor Day holiday "observed an uptick in identity fraud claim attempts aimed at exploiting the unemployment insurance system."

Economists polled by Reuters had forecast 240,000 claims for the latest week. Layoffs remain relatively low, but the hiring side of the labor market has almost stalled. Demand for workers has slowed, with economists blaming uncertainty stemming fromtariffson imports. At the same time, an immigration crackdown has reduced labor supply, creating what Federal Reserve Chair Jerome Powell on Wednesday described as a "curious balance."

"Typically when we say things are in balance, that sounds good," Powell told reporters. "But in this case, the balance is because both supply and demand have come down quite sharply. We now see the unemployment rate edging up."

FED CUTS INTEREST RATES

The U.S. central bank on Wednesday cut its benchmark overnight interest rate by a quarter-percentage-point to a 4.00%-4.25% range and projected a steady pace of reductions for the rest of 2025 to help the labor market. The Fed paused its policy easing cycle in January because of uncertainty over the inflationary impact of President DonaldTrump'simport tariffs.

The claims data covered the period during which the government surveyed business establishments for the nonfarm payrolls component of September's employment report. Payrolls increased by only 22,000 jobs in August, with employment gains averaging 29,000 positions per month over the last three months.

The unemployment rate is near a four-year high of 4.3%. The government said last week payrolls could have been overstated by 911,000 jobs in the 12 months through March.

Though layoffs remain low, those who lose their jobs are experiencing long bouts of unemployment because of the stall-speed pace of hiring. The number of people receiving benefits after an initial week of aid fell 7,000 to 1.920 million during the week ending September 6, the claims report showed.

The average duration of joblessness jumped to 24.5 weeks in August, the longest since April 2022, from 24.1 in July.

Source: Reuters