The largest US interest rate increase since 1994
Hello from London where the biggest story of the week is central banks’ fight against inflation. So will the US Federal Reserve be able to bring down inflation without causing a painful economic downturn? The central bank announced the largest interest rate increase since 1994, raising its benchmark policy rate by 0.75 percentage points and signalling further adjustments into 2023. Fed chair Jay Powell said that factors beyond the bank’s control, such as a surge in commodity prices stemming from the war in Ukraine, could?remove the possibility of a “softish landing”.?The Bank of England took a more measured approach today and raised interest rates by 0.25 percentage points.
In Europe, meanwhile, there were?chilling echoes of the eurozone sovereign debt crisis, as Martin Sandbu writes. At a meeting last Thursday, the European Central Bank indicated it would end its bond-buying programme and raise rates above zero for the first time in a decade. The news spooked investors and led to a sell-off in bond markets that hit the debt of more vulnerable eurozone countries such as Italy and Greece. The bank held an emergency meeting yesterday, at which it promised a new tool to?counter surging borrowing costs.
My choices this week
1.?Major?crypto exchanges are slashing hundreds of jobs?as this year’s dramatic drop in digital asset prices stifles the trading activity that sustains the industry. We speak to sector leaders?to find out what the lay-offs mean for the crypto markets.
2.?Critics say?the growth of the “servant economy”?— ultrafast delivery apps and gig companies such as Gorillas and Uber — is a symptom of resurgent economic inequality. But can they survive rising consumer prices, asks employment columnist Sarah O’Connor.?(Free to read)
3.?The current era of high inflation, wars in key commodity-producing regions, slowing growth and turbulence in stock markets are reminiscent of the 1970s, writes Martin Wolf.?What can we learn from the mistakes made then?
4.?Joe Biden will meet Crown Prince Mohammed bin Salman in Saudi Arabia next month, after promising never to engage with him again.?We weigh the cost of engaging with MBS?in exchange for help to limit the impact of the Ukraine war on oil prices.
领英推荐
5.?Russian businessmen under sanctions have been heading to Iran to get?tips on how to access the world’s black markets. In this fascinating report, Tehran correspondent Najmeh Bozorgmehr explains how the war in Ukraine has benefited Iran.
6.?What is gentle parenting, and does it work??In this week’s FT Weekend Magazine cover story, Courtney Weaver dives into the Instagram-friendly parenting movement, and explains why it’s stressing so many parents out.?(Free to read)
Thanks for reading,
Roula
PS:?We have a special subscription offer for readers of this newsletter.?Click here to receive 50 per cent off?a standard digital subscription, and get access to FT.com as well as our excellent newsletters including Inside Politics and FirstFT.
Recommended newsletters for you
In Today’s FT?— Your daily overview of FT’s top stories.?Sign up here
World News?— Get a global overview of the business stories you need to know.?Sign up here
Independent Writing and Editing Professional
2 年The Federal Reserve is the father of inflation. Suspect anything it does.
Professional Sales Executive with more than 10 years experience in product sales and customer service to retail consumers and business to business. MBA graduated.
2 年The US interest hikes are not enough to tame the excessive inflation. Excessive money printing has now starting to take toll of the US economy and we are likely to see a stag inflation for at least couple of years. Great time for investors ??
Program Director at Journey Santa Fe
2 年Big mistake
Central Banks have to slay the Inflation Dragon. There was a wall of M2 money supply released in response to covid. Governments had to 'flatten the curve' of covid cases then, now they need to flatten the inflation curve brought on by the necessary emergency measures in response to covid. Look at the large jump in money supply around the covid era. We have to pay it back or hyperinflation will run rampant.