International equities remain on tenterhooks before expected rate hikes by the US Federal Reserve in March to prevent the highest inflation in 40 years from persisting much longer.
Added to this is the conflict in Ukraine and its effect on the economy, especially its impact on the price of raw materials such as gas and oil.
As for the Fed, its authorities agreed at their January meeting that, with more weighty inflation in the economy and solid employment, it was time to tighten monetary policy in the United States, but also that decisions will depend on an analysis meeting by meeting, according to the minutes of the meeting.
Participants agreed that target interest rates would likely need to rise at a “faster pace” than when the Fed last raised them in 2015.
Wednesday also revealed that retail sales increased 3.8% in January, with a strong rebound from the previous month, led by an increase in purchases of motor vehicles and other goods. Economists had forecast a 2% rise.
“If the consumer can absorb, continue to spend and thrive in this inflationary period, that gives the Federal Reserve more room to be aggressive in its monetary policy,” said Keith Buchanan, portfolio manager at Globalt Investments in Atlanta.
Markets are pricing in a 57.5% chance of a 50 basis point hike at the next Fed meeting on March 16 and a 42.5% chance of a 25 basis point hike.
Source: Ambito
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