Markets jolted as hawkish Fed announces upcoming US rate hike – business live | Business
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Global markets are rocked today after the US central bank signaled it was ready to raise interest rates as it battled the highest rate of inflation in forty years.
Federal Reserve Chairman Jerome Powell struck a particularly hawkish tone at last night’s press conference, saying officials were willing to drum up interest in March and were not ruling out an aggressive round of hikes. interest rates at future meetings.
Powell told reporters there was “quite a lot of room to raise interest rates without threatening the labor market” as he also prepares to trim his balance sheet which has ballooned to $9 trillion.
He also warned that inflation remains above the Fed’s long-term target and that supply chain issues could be more persistent than previously thought.
Investors are bracing for a sharp hike in interest rates this year, after Powell hinted the Fed could tighten policy faster than in its last hike cycle as growth and inflation are higher than before. ‘in 2015.
As Powell said:
We will have to be, as I mentioned, nimble about this. The economy is much different this time.
Powell’s hawkish comments shattered Wall Street’s rally on Wednesday and sent stocks in Asia-Pacific markets to their lowest level in 15 months.
“The Fed has gone from being the market’s best friend to a possible enemy,” said Kyle Rodda, an analyst at online trading platform IG in Sydney, adding that the Fed was determined to “bring down inflation rather than protecting asset prices”.
from Japan Nikkei led the way, plunging more than 3% as the Kospi in Seoul ended up in equally negative territory. The market in Hong Kong was down 2.5% and Sydney lost almost 2%.
MSCI a large measure of regional markets outside of Japan fell more than 2% to their lowest level since November 2020.
European stock markets are set to fall sharply as January’s market turmoil continues.
Also coming today
We find out how the US economy fared in the last three months of 2021, when the first GDP estimate for October-December is released.
Economists predict growth picked up to an annualized 5.5% from 2.3% in the third quarter before the Omicron variant hit at the end of the year
In the UK, car production fell to its lowest level since 1956 as rising energy costs and a shortage of computer chips hurt the recovery.
- 7am GMT: GfK survey on German consumer confidence
- 11am GMT: CBI UK retail survey
- 13:30 GMT: US Q4 GDP report
- 1:30 p.m .: Weekly unemployment figures in the United States
- 15:00 GMT: US home sales pending