Wednesday’s FOMC meeting took center stage this week with the Federal Reserve announcing a widely expected rate hike of 25 bps. The major US stock indexes posted weekly gains to recover ground lost in the preceding two weekly declines. It was the strongest weekly result since November 2020 for the S&P 500, the NASDAQ, and the Dow. The Federal Reserve stands poised to begin lifting its short-term interest rates–likely by a quarter-point–and ending emergency bond buying. The stock market will be watching Fed Chairman Jerome Powell’s comments for indications on how aggressively the central bank will move to rein in surging inflation.
Meanwhile, the European Central Bank surprised markets with a plan to wind down stimulus sooner than planned, but given a more bearish outlook on growth in the Eurozone, they are likely to remain data driven. The United Kingdom’s central bank on Thursday raised its key interest rate for the third time over the course of three policy meetings. With UK inflation recently hitting a 30-year high, The Bank of England lifted its key rate to 0.75% from 0.50% and said further increases might be needed over the coming months.