ECONOMIC AND MARKET OVERVIEW
Rising inflation and increasing interest rates are front of mind for most investors as the effects of the war in Ukraine seem to be priced into markets.
Jerome Powell, chairman of the US Federal Reserve, announced on 5 May that the benchmark interest rate has been increased by 50 basis points. This is the biggest increase in 20 years, but is still in line with market expectations. This move is their most aggressive step yet in the fight against 40 year high US inflation.
In the news conference following the announcement Powell said that “inflation is much too high and we understand the hardship it is causing. We’re moving expeditiously to bring it back down.” He further noted the burden of inflation on lower income people, saying,“we’re strongly committed to restoring price stability.” These comments equate to, according to the chairman’s comments, multiple 50 basis point rate hikes ahead, though likely nothing more aggressive than that.
