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Federal Reserve opts to hike interest rates as inflation pressures grow
On Wednesday, the Federal Reserve announced that it will be increasing interest rates for the first time in three years.
As many had expected the Fed increased rates by 25 basis points or 0.25%, as inflation continues to rise at record levels.
In a statement, the bank said, “Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures”.
In relation to Russia’s invasion of Ukraine, it stated, “The invasion of Ukraine by Russia is causing tremendous human and economic hardship”.
| 💡 What are the expected figures Inflation Rate in the United States is expected to be 8.50 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. In the long-term, the United States Inflation Rate is projected to trend around 1.90 percent in 2023, according to our econometric models. |
Adding that, “The implications for the U.S. economy are highly uncertain, but in the near term the invasion and related events are likely to create additional upward pressure on inflation and weigh on economic activity”.
GBPUSD rallied to 1.3116 on the news.
Zelensky pleads to congress for “no-fly zone”
Ukrainian President Volodymyr Zelensky spoke to the U.S. congress on Wednesday, in hopes that the self-proclaimed world’s leader would do more to intervene in its war with Russia.
Zelensky who spoke by video link pleaded for a no-fly zone to be imposed on Russia, in the hopes of preventing airstrikes from being a “source of death”.
He commented that “Russia has turned the Ukrainian sky into a source of death for thousands of people”.
NATO had already refused this request, however Zelensky insisted, “Is this a lot to ask for – to create a no-fly zone over Ukraine to save people? Is this too much?”.
Gold prices initially fell on the news, however rebounded following the Fed’s announcement.
Oil falls as crude inventories rise by over 4 million
Crude oil was once again lower, as data revealed that inventories had unexpectedly risen last week.
Figures from the Energy Information Administration reported that crude inventories had risen by 4.345m barrels last week.
source: tradingeconomics.com
This is substantially higher than the draw of 1.375 million barrels markets had expected and pushed oil prices to a 2-week low.
WTI crude hit an intraday low of $94.96 in today’s session, which is the lowest it has traded since March 1st.
Traders now wait to see if peace talks will prove to be successful between Russia and Ukraine, if not we could see prices head back up towards the $130 level.
“The fundamental law of investing is the uncertainty of the future.”
-Peter Bernstein.
