Bank of England sees half a point hike as inflation shows signs of peaking
The bank of england faces the unenviable task of navigating a slowing economy, soaring inflation and an extremely tight labor market.
The market is broadly pricing in a 50 basis point hike on Thursday to take its main discount rate to 3.5%, a slowdown from November’s 75 basis point increase, the largest in 33 years.
After hitting a 41-year high in October, the annual rise in the UK consumer price index slowed to 10.7% in Novembernew figures revealed on Wednesday.
British Pound and Euro Fall Against US Dollar as Risk Aversion Returns
Sterling fell 0.9% against the U.S. dollar on Thursday morning to trade just above $1.23, as general risk aversion sentiment spread across currency markets, boosting the traditional greenback refuge.
The euro was also down 0.7% against the dollar, just above $1.06.
Swiss central bank raises interest rates by 50 basis points to counter “further spread of inflation”
The Swiss National Bank on Thursday raised its key rate for the third time this year, bringing it to 1%.
The central bank said it was seeking to counter “increased inflationary pressure and further spread of inflation” with the move.
Inflation in the country remains well above the Swiss National Bank’s 0-2% target, but is significantly below the surge rate of neighboring European countries. Switzerland’s inflation rate held steady at 3% last month, after falling from a three-decade high of 3.5% in August.
– Hannah Ward-Glenton
Stocks on the move: Beijer Ref down 7%, Getinge down 5%
Beer Ref Shares fell 7% in early trade to the Stoxx 600 low after the Swedish cooling technology firm announced the acquisition of US firm Heritage Distribution.
Swedish medical technology company Wasp also fell 5.8%.
Reopening China ‘necessary’ to lower US inflation: Siegel
China’s economic reopening is overdue, but it’s critical to controlling inflationary pressures in the United States, Wharton School of Business professor Jeremy Siegel told CNBC’s “Street Signs Asia.”
“For the United States, we import so much from China that if those supply chains normalize it would bring inflation down, so I applaud China’s decision,” he said. “It’s way too late, it should have been earlier, but it’s necessary,” he said.
Siegel added that he expects the US Federal Reserve to raise rates again at the February meeting by 25 basis points before pivoting.
— Jihye Lee
CNBC Pro: Missed the China Reopening Rally? Bank of America names global stocks to ride rematch
Investors will have a second opportunity to participate in the stock market rally after China announced an easing of Covid-19 restrictions, according to Bank of America.
The bank named more than 10 stocks after finding “green shoots of recovery in high-frequency data” that indicate rising profits for companies exporting to China.
CNBC Pro subscribers can learn more here.
Fed announces 50 bps rate hike
The Fed announced that it would raise interest rates by 50 basis points, marking the end of the pattern of 75 basis point hikes seen in recent months.
Before this decision, the Fed had raised rates by 75 basis points in the last four meetings. One basis point equals 0.01%.
The 50 basis point hike was widely expected ahead of the meeting.
This is the final policy decision expected from the central bank in 2022.
— Alex Harring
Powell wants ‘much more evidence’ that inflation is slowing
Federal Reserve Chairman Jerome Powell said Wednesday that recent positive signs of inflation were not enough for the central bank to dampen interest rate hikes.
“It will take a lot more evidence to be confident that inflation is on a sustained downward path,” Powell said at his press conference after the meeting.
The comments came as the Fed raised its benchmark rate another half a percentage point and signaled that at least three more quarter points of hikes are ahead. The decision also comes a day after November’s consumer price index rose just 0.1%, indicating that inflation may have peaked.
However, Powell said inflation remained a problem.
“Pricing pressures remain evident across a wide range of goods and services,” Powell added.
European markets: here are the opening calls
European markets are heading for a lower open on Thursday as investors react to the latest monetary policy decision and comments from the US Federal Reserve.
The United Kingdom FTSE100 the index is expected to open 5 points lower at 7,489, the German index DAX 51 points less at 14,410, France CAC down 20 points to 6,708 and Italy MIB FTSE down 116 points to 24,448, according to IG data.
There is revenue due to K&M and Currys, and data releases include new car registrations in November for several European countries. The Bank of England is expected to announce another rate hike to fight inflation.