Federal Reserve says first interest rate hike will be ‘soon’

Citing high inflation and a strong labor market, the Federal Reserve (Fed) said Wednesday that an interest rate hike “will soon be appropriate.” The central bank is under pressure to rein in inflation as prices in the United States rise at the fastest pace in nearly 40 years. Analysts are expecting a rate hike in March, which would be the first since 2018.

At a press conference after Wednesday’s monetary policy meeting, Fed Chairman Jerome Powell did not say how fast or how high U.S. interest rates would rise. But he said officials were “agreed” to raising the bank’s key rate in March, adding he was confident the bank could act without hampering the economic recovery.

Meanwhile, growth in business activity in the eurozone slowed for a second consecutive month in January as the spread of the Omicron variant weighed increasingly heavily on the currency bloc’s economy. The IHS Market’s Composite Purchasing Managers’ Index (PMI) slipped to an 11-month low of 52.4 in January, from 53.3 in December. The score was expected to fall to 52.6. A reading above 50.0 indicates expansion in the sector.

While relief from supply chain delays provided a welcome boost to manufacturing output, new COVID-19 related restrictions led to a noticeable slowdown in service sector growth. Indeed, the services PMI came in at 51.2, compared to 53.1 the previous month and the economists’ forecast of 52.2. Meanwhile, the manufacturing PMI unexpectedly rose to 59.0 from 58.0 a month ago. The score was expected at 57.5.

Finally, Ba in Germany, business confidence improved at the start of the year as companies expected disruptions from the Omicron variant to ease in the coming months, results showed on Tuesday. a survey by the Ifo Institute. The Ifo business climate index rose to 95.7 in January from a revised 94.8 the previous month. The reading should remain unchanged at 94.7. The current situation index came in at 96.1 from 96.9 in December, while the expectations index rose to 95.2 in January from 92.7 the previous month. The expected score was 93.0.

“The German economy is starting the new year with a glimmer of hope,” said Ifo President Clemens Fuest.

Company executives were considerably more optimistic about their business prospects, while their assessment of the current situation was somewhat less optimistic, Fuest added.

This article has been prepared by Bank of Valletta plc for general information purposes only.

Independent journalism costs money. Support Times of Malta for the price of a coffee.

Support us

About Troy McMiller

Check Also

Seoul shares open higher on easing uncertainty over Fed rate hikes

On Thursday, an electronic chart showing the Korea Composite Stock Price Index (Kospi) in a …