European Commission President Jean-Claude Juncker gave optimism there was still time for a Brexit deal. In an interview with Sky News, he said Boris Johnson’s proposal of technology-based “alternative arrangements” could form the basis of progress in the ongoing talks.
He also said avoiding a hard and physical border between Northern Ireland and the Republic of Ireland had to be the key objective, and that if “these objectives are met by the alternative arrangements, then we don’t need the backstop”. However, Juncker caveated the optimism by stating that if no deal was agreed, there would have to be checks on the border.
Across the pond, the Federal Reserve intervened again on Friday, 20 September in a bid to reduce the cost of borrowing. The overnight repurchase agreement (repo) rate, which banks and major financial institutions borrow and lend money to each other at, jumped to its highest since the 2008 financial crisis, hitting 10 per cent on Tuesday, 17 September and prompting the Fed to intervene.
The Fed’s New York branch pumped $75 billion into the market for three days last week, which has brought the rates back to more normal levels and closer to the US central bank’s 1.75–2 per cent target range. The concern is that with global growth still being squeezed and little to no end in sight to the Sino-US trade war, the Fed had to intervene again.
The week begins fairly light on data, with the focus on confidence data from the German manufacturing sector. Purchasing Manager’s Index data for the engine room of the Eurozone has been painfully weak and contracting since the beginning of the year. The release for September is expected to show things improving a little at 44, versus 43.5 in August. However, this is still a long way from a reading of 50, which would show expansion.
BoE keeps rates on hold
Fed cuts rates, sheds no light on what is next
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