Fed raises rates; oil falls on Saudi supply news
The Federal Reserve hiked rates for the first time since 2023 while Brent crude dropped below $105 as Saudi Arabia offered extra barrels via Oman.
KEY POINTS
- Fed raises rates 25 bps to 3.75%-4%, first hike since 2023
- Brent crude falls to $104.59 on Saudi supply via Oman
- Gold rises over 1% as oil declines support bullion
- Romanian leu weakens to near record low versus euro
- U.S. stocks gain on lower oil and reduced policy uncertainty
The Federal Reserve unanimously raised its benchmark rate by 25 basis points to a 3.75%-4% range on Wednesday, the first increase since 2023. Fed projections signal at least one more hike this year, with 16 of 18 policymakers expecting further tightening.
Brent crude futures for November delivery fell 1.2% to $104.59 a barrel, while WTI dropped 1.1% to $101.29. The decline followed reports that Saudi Arabia would supply additional crude through Oman, easing supply fears linked to Middle East tensions.
“If oil prices continue to fall, at least in the medium term it can support the rise in gold prices.”
Gold rose more than 1% on Thursday as investors digested the Fed move and falling oil prices. OANDA analyst Kelvin Wong said sustained oil declines could support gold in the medium term, though he expects bullion to trade in a range for now.
The Romanian leu hovered near its all-time low against the euro, with the interbank rate at 5.2620-5.2642 lei per euro. The National Bank of Romania set the reference rate at 5.2637 lei, the highest since May.
U.S. equity markets closed higher on Thursday as falling oil prices and reduced policy uncertainty lifted risk appetite. The 10-year Treasury yield held near 4.94% while the dollar index stayed above 100.
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