The Bank of Russia unexpectedly maintained its key interest rate at a record-high 21% , defying analysts’ expectations of another significant hike as inflation remains stubbornly elevated. The decision marks a shift toward a more measured approach in balancing economic growth and price stability. Key Details Inflation Concerns: Annual inflation climbed to 8.9% in November, well above the central bank’s 4% target , with inflation expectations reaching 13.9% in December. Policy Rationale: The central bank cited the significant tightening of monetary conditions after October’s 200-basis point hike as sufficient to resume disinflationary processes. Governor Elvira Nabiullina emphasized avoiding both economic overheating and severe slowdowns. Economic Overheating: Elevated government spending on the war in Ukraine and social programs, coupled with labor shortages and rising wages, have fueled strong domestic demand, exacerbating price pressures...
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US stocks were mixed as investors brace for inflation data that could solidify bets for another Federal Reserve interest-rate hike.
The tech-heavy Nasdaq 100 fell for the fifth time in six sessions as traders considered another rate hike in May. The S&P 500 fluctuated between gains and losses, while the yield on policy-sensitive two-year Treasuries remained stable at roughly 4%.
Cracks are forming in 2023's equity advance, as hedge funds and other speculators amass the largest short position since November 2011, when the US sovereign credit rating was downgraded. Inflation data will be released on Wednesday, and banks will begin what is expected to be the worst earnings season since the pandemic's depths on Friday.
Despite recent financial difficulties, the Federal Reserve appears to be on pace to keep hiking rates, with solid job markets and rising oil prices swaying officials focused on their price-stability mandate.
Although US payrolls rose at a solid pace last month and the unemployment rate fell, markets are pricing in a significant possibility that the Fed will boost borrowing by a quarter-point on May 3 to manage inflation. Wednesday's consumer price report, which is projected to show a 0.4% monthly increase in the core consumer price index, could solidify the Fed's rate path.
A scenario in which the Fed stops raising interest rates in May, which markets briefly contemplated last month as bank instability heightened recession fears, appears increasingly implausible.
Furthermore, the International Monetary Fund cut its global growth predictions, citing recent banking sector turbulence as well as Russia's invasion of Ukraine. Bitcoin gained for the fourth day in a row, breaking through the $30,000 barrier for the first time in ten months.
Oil prices fluctuated, with West Texas Intermediate trading at $80 per barrel after falling below. Gold was somewhat higher, hovering about $2,000 per ounce.
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