Financial Markets Daily Report15 December 2022
In yesterday’s session, the US Federal Reserve meeting centered the stage. It raised official interest rates by 50bp up the 4.25%-4.50% target range, a slowdown in the pace of monetary policy tightening, but still a large move by historical standards. Jerome Powell signaled that ongoing interest rate hikes will be necessary to return price stability.
- In yesterday’s session, the US Federal Reserve meeting centered the stage. It raised official interest rates by 50bp up the 4.25%-4.50% target range, a slowdown in the pace of monetary policy tightening, but still a large move by historical standards. Jerome Powell signaled that ongoing interest rate hikes will be necessary to return price stability.
- In particular, the dot plot shows a consensus among FOMC participants to raise official interest rates by 75bp in 2023 up to 5.00%-5.25% and start loosening monetary policy in 2024. Unemployment and inflation were revised upwards.
- In this context, US sovereign yields were little changed, as both the decision and communication were in line with expectations, while euro area yields edged up. Stock indices declined in both sides of the Atlantic.
- Today the focus will be on the ECB, which is expected to also lift official interest rates by 50bp, bringing the depo rate to 2.00%, and to give some hints about its quantitative tightening. The Bank of England is also meeting today.