Are central banks making the right moves to combat inflation? Plus: a global oil crisis, no slowdown in the housing market, and more

Welcome back to?This Week in Finance, your weekly roundup of the conversations and top voices trending among financial professionals on LinkedIn. Click Subscribe to be notified of each edition. This week:

Fed hikes rates by quarter point

The U.S. Federal Reserve lifted its key lending rate by a quarter of a percentage point in what it indicated was the start of the first tightening cycle since 2015-2018. The central bank, which cut rates almost to zero as the pandemic hit with force in 2020, said Wednesday that broad price pressures such as the war in Ukraine prompted it to increase the federal funds rate to between 0.25% and 0.5%. Beset as well by supply disruptions due to COVID, the U.S. economy is seeing its fastest inflation in 40 years.

• The Fed penciled in six more rate increases for this year alone, which would bring the fed funds rate to 1.9%.
• The projected increases will feed through to everything from credit cards to car loans and mortgages.
• Inflation has thrown a wrench in retail sales, which grew just 0.3% last month after ramping up almost 5% in January.
• Here's what people are saying.

• BoE hikes again: The Bank of England raised interest rates to 0.75%, the third rise in four months, with the aim of curbing price rises. Inflation is predicted to reach 8% in coming months, as commodity and energy continue to put pressure on prices. Lloyds and Santander were among the first banks to raise mortgage rates; analysts said banks were unlikely to pass on the rate to savers.

• What rate hikes mean for everyday people: See how higher interest rates will affect Americans’ finances, from mortgages to savings accounts.

Inflation is supercharged by war

Inflation was already soaring as a result of the pandemic and snarled supply chains. Now it's being pushed even higher by the war in Ukraine and the sanctions slapped on Moscow. Gasoline and natural gas prices are spiking as the world adjusts to reduced Russian energy supplies. Food costs are set to rise across globally as Russia and Ukraine — which together provide about 30% of the world's wheat — struggle to export grain. And export bans on metals produced in Russia, such as palladium and nickel, are expected to fuel further increases in car prices. ?? Here's what people are saying.

• Inflation takes a bite out of retail: Shopping slowed sharply in February in the face of rising prices — particularly at the gas pump.
• Rising prices hit Canadian consumers: The drop in retail sales comes as Canadians say they've been looking for ways to curb spending amid the biggest jump in prices since 1991.

Is a global oil crisis brewing?

Russia’s invasion of Ukraine and western sanctions on Moscow could trigger the global oil market's “biggest supply crisis in decades," the International Energy Agency warned Wednesday. The Paris-based agency said Russia could slash its oil production by up to one-third in April — about 3 million barrels a day — as sanctions take hold and shipping companies shun its exports. Because of that reduction, global oil demand will likely exceed supply later this year, the IEA said, causing energy prices to spike higher and global growth to be depressed.

• Saudi Arabia and the United Arab Emirates are the only major oil producers that could add volume to make up for lost supply from Russia, the world's second-largest oil producer. Neither country has shown a willingness to up production.
• Here's what people are saying.
• Energy security in the spotlight: Across Europe, governments are rapidly upping investment in new energy sources in the wake of Russia’s invasion of Ukraine, which has pushed up prices of oil and gas.

Deutsche Bank quits Russia after all

Deutsche Bank now says it plans to shut down operations in Russia just one day after its CFO told CNBC it wouldn't be "practical" to withdraw its business. The reversal comes after Wall Street rivals Goldman Sachs and JPMorgan Chase announced they would wind down operations in response to Russia's invasion of Ukraine. Deutsche Bank added that its exposure to Russia had already been cut "substantially" since 2014, after Russia’s annexation of Crimea.

• Citigroup has also announced it is expanding on its exit from Russia. As well as forging ahead with its existing plan to sell its consumer bank in the country, Citi said it would "continue to reduce our remaining operations and exposure."
• Here's what people are saying.

JPMorgan snaps up another firm

JPMorgan is moving to acquire Irish fintech firm Global Shares in a deal that executives contend will help the bank provide "new, innovative capabilities" to private and public clients and assist in wealth management. The terms of the deal weren't disclosed, but Global Shares administers roughly $200 billion in assets, more than 650,000 employee participants, and about 600 corporate clients. It's the latest in a string of deals for the banking giant — last year marked JPMorgan's most active year for acquiring and taking stakes in smaller firms since the financial crisis. ?? Here's what people are saying.

Auditors are getting audited: WSJ

When companies report financial information like earnings, the public trusts the accuracy of the numbers in large part because they are audited by independent firms. Now the top U.S. financial watchdog is probing whether the big auditing firms can, in fact, be unbiased when they are also selling other services to the companies they inspect, The Wall Street Journal reports, citing unnamed sources. The Securities and Exchange Commission is seeking information from the "Big Four" accounting firms — Deloitte, EY, KPMG, and PwC — about work that may "violate rules requiring they be independent of clients whose finances they inspect," The Journal reports. ?? Here's what people are saying.

Properties paying out more than jobs

As property prices soared over the past year, many homeowners found their houses made more money than they did. According to a recent Zillow estimate, the average home appreciated in value by $52,667 — outpacing the average salary in the U.S. by more than $2,000. While it's good news for homeowners, first-time buyers are at a big disadvantage. "The people who are winning the housing bids, typically, are folks who have higher incomes or have the equity from their previous home,” said economist Nicole Bachaud. ?? Here's what people are saying.

• Mortgage rates rise above 4%: The last time mortgage rates in the U.S. went above 4%, the average house price was 26% lower than today's average property price — meaning homeowners hoping to refinance to save money may now struggle. However, given the current limited inventory, there are still a significant number of people willing to secure mortgages at 4% and above.
• Everyone is surfing Zillow: In a red-hot housing market, aspiring buyers feel pressure to act quickly, even if that means scheduling viewings on their lunch breaks.
• Rent inflation is breaking records: Asking rates for single-family rentals in the U.S. jumped an annual 12.6%, led by an almost 39% gain in Miami. The pressure, particularly in Sunbelt cities, comes as a dwindling supply of affordable houses for sale forces more Americans into the rental market.
• Canadian home prices jump to new record: The average Canadian home price climbed to a record high in February — a whopping 20% jump from a year earlier.
• What about real estate in the metaverse?: Land transactions in the metaverse are on the rise, while analysts warn there are a range of associated risks, including future regulation and uncertainty over which digital worlds will win out.

China lockdowns rattle supply chains

A surge in COVID-19 cases has led China to implement a total lockdown in the southern tech hub of Shenzhen, sending shockwaves through the already reeling global supply chain. Shenzhen is the heart of China's electronics industry — Tencent and Huawei are based there — and has the fourth-largest port in the world. Goods are now piling up at docks and Foxconn, one of Apple's main iPhone manufacturers, has shut down two of its largest sites in the city. The lockdown is scheduled to last a week. ?? Here's what people are saying.

Citi's retention plan? Spain

Like other banks, Citigroup has been grappling with high turnover. In addition to the classic finance approach of throwing more money at the problem, the lender is building a new hub in Malaga, Spain, where it will hire 30 junior analysts, per Bloomberg. Employees will make half the salary of their counterparts in New York, but will only be expected to work 40 hours a week. The hope is that a better work-life balance, not to mention the city’s beauty and beaches, will increase retention. ?? Here's what people are saying.

• Citi to cover abortion travel costs: The financial giant’s move follows laws recently enacted in Texas and in other states that restrict abortion access.

With?Cate Chapman, Siobhan Morrin,?Theunis Bates,?Riva Gold, Jake Perez,?Kelli Nguyen, Harriet Sinclair,?Melissa Cantor, Laura Entis, and Alessandra Riemer.

What's your take on the week's news and other developments impacting you or your business? Join the conversation in the comments below.