Weekly Market View from Realm Investment Management. Week ending 17th June 2022.
High inflation, rising interest rates and recession worries continue to weigh heavy on investor’s minds.
The US Federal Reserve finished its latest policy meeting on Wednesday with the announcement that it was raising its benchmark interest rate by 0.75%. That was the first 0.75 hike since 1994 and equity markets fell heavily in response but it wasn’t just risk assets that declined this week, bonds, commodities and gold all sold-off as well.
Until the start of the week the market had not been expecting such a large increase but the previous Friday’s Consumer Price Index (CPI) reading changed that view. In the post-meeting press conference Fed Chairman Jerome Powell indicated he was willing to make the same move again if necessary, but also noted that there was “no sign of a broader slowdown that I can see in the economy”.
In the UK, the Bank of England made similar comments after raising its key rate by 0.25% to 1.25%, saying “the committee will be particularly alert to indications of more persistent inflationary pressures and will, if necessary, act forcefully in response.”
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