The U.S. Federal Reserve has kicked off 2022 with a clear message: rates will rise to contain surging inflation.
and reaffirmed plans to end its bond purchases that month in what U.S. central bank chief Jerome Powell pledged will be a sustained battle to tame inflation.
The possibility the Fed could move even more aggressively has unnerved Wall Street, putting the S&P 500 index on track for its biggest monthly drop since March 2020.at every meeting from March to June and then revert to a quarterly tightening cycle from September, amounting to five hikes this year. Nomura, meanwhile, predicts a 50-bps move in March.The Bank of Canada on Wednesday surprised some by opting not to raise the 0.
December inflation at 4.8% was the highest since 1991 and well above the bank's 1%-3% control range. Markets are pricing a 90% chance of a hike to 0.50% in March 2, and at least five increases this year.With the hottest consumer inflation since 2014 and strongest labour market since 2008, the Reserve Bank of Australia will face immense pressure at next week's meeting to abandon its dovish stance.
It has already moved toward unwinding pandemic stimulus by ditching an ultra-low bond yield target and has opened the door for a 2023 rate hike, versus a previous forecast of 2024.forecast the RBA to hike rates in November and end QE next week.Sweden has ended pandemic-era lending facilities but has pencilled in a rate hike only for late 2024.
Headline inflation in December was 4.1% versus the 2% target. The December surge was due mainly to electricity prices and overall price pressures remain modest, central bank Governor Stefan Ingves said earlier this month.
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