The Commonwealth Bank of Australia (ASX: CBA) share price is trading in the red today.
At the time of writing, the CBA share price is fetching $91.40 apiece, around 1.7% lower from the open on no news.
In broad market moves, the S&P/ASX 200 Financials Index (ASX: XFJ) has also slipped 1.2% into the red today, reversing a relief rally started on 17 June.
What’s up with the CBA share price?
Whilst there’s nothing specific out of CBA’s camp today, when zooming out and looking at the macroeconomic picture, there’s lots to talk about.
Firstly, the bank has just completed a 140 basis point increase to its fixed lending rates, following similar moves by the Reserve Bank (RBA) to the cash rate a few weeks ago.
Under the new terms, CBA’s 1-year fixed rates are now 4.99%, whereas 5-year fixed rates have lifted to 6.69%.
Aside from that, US Federal Reserve chair Jerome Powell added some colour to the inflation narrative at the Economic Policy Panel in Portugal on Wednesday.
“Weâre [the Fed] strongly committed to using our tools to get inflation to come down. The way to do that is to slow down growth, ideally keeping it positive,” Powell said.
“Is there a risk that would go too far? Certainly, thereâs a risk,” he added. But the bigger risk would be to “fail to restore price stability,” he countered.
Central banks use interest rates as a primary tool to tackle inflation, so there’s much speculation that further interest rate hikes are on the way, especially from this language.
The RBA looks set to continue its tightening cycle as well, which raises questions on whether CBA will pass these through to customers.
Alas, with investors budgeting less and less to risk in 2022, the selling continues for the CBA share price on Thursday.
That brings losses to 8.5% for the last 12 months, and 9.5% for the year to date.
The post Why the CBA share price is slipping lower today appeared first on The Motley Fool Australia.
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More reading
- Volt gets packing as ASX 200 bank shares prove to be a formidable force
- Own CBA shares? Here’s how the major bank’s bet on Klarna is holding up
- CBA share price leads the big four as banks outperform ASX 200 on Monday
- Why did the CBA share price underperform the other ASX 200 banks today?
- Should you ‘buy the dip’ in ASX 200 bank shares?
Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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