The US Federal Reserve is beginning to tighten monetary policy

Yesterday, the US Federal Reserve raised the interest rates by 0.25%. In addition, the Fed warned of further increases. A total of 7 hikes are expected this year and four more next year. Fed policymakers see the risk of further inflationary pressures (the forecast for 2022 increased to 4.3% from 2.6%) and economic slowdowns (the forecast for GDP growth was reduced to 2.8% from 4%). The Fed will decide on a balance sheet reduction at its upcoming meetings and consider a more rapid stimulus reduction.

“Russia’s invasion of Ukraine is causing tremendous human and economic hardship. The implications for the US economy are highly uncertain, but in the short term, the invasion and related events are likely to create additional upward pressure on inflation and reduce economic activity,” the Fed said in a statement.

Austrian Raiffeisenbank is considering leaving its subsidiary bank in Russia.

Five airlines of Alexei Isaikin’s “Volga-Dnepr,” Russia’s largest air cargo group specializing in worldwide shipments, canceled flights. The European Aviation Safety Agency (EASA) has revoked the certificates of the group’s repair organization, “Volga-Dnepr Technics Moscow.” According to the regulator’s decision, “AirBridgeCargo,” “Atran,” and “Volga-Dnepr” were left without valid safety certificates allowing them to fly in the airspace of the European Union.

The American printing equipment manufacturer Xerox has suspended deliveries to Russia and provided cash grants to its employees in Ukraine.

On Thursday, oil prices increased about 3% after the International Energy Agency (IEA) said markets could lose three million barrels of Russian oil and oil products a day starting in April. The supply loss will be much greater than the expected drop in demand.

Gold rose slightly in Asian trading Thursday morning but remained near a three-week low at the previous session as a US Federal Reserve interest rate hike pushed up US Treasury yields, which inversely correlated to gold and silver.

Asian stock indices increased at the end of the day yesterday. Japan’s Nikkei 225 (JP225) gained 1.64% yesterday, Hong Kong’s Hang Seng (HK50) jumped by 9.08%, Australian S&P/ASX 200 (AU200) added 1.10%.

On Thursday, Bank of Japan Governor Haruhiko Kuroda reduced the probability of inflation reaching the 2% target and argued for maintaining an ultra-soft monetary policy. A former senior Japanese currency diplomat said that tightening monetary policy or intervening in the currency market will do little to reverse the undesirable fall in the yen, causing fuel and commodity prices to rise.

The reduction in new COVID-19 cases in China has raised hopes that the authorities will be able to lift bans and allow plants to resume production in quarantined cities. The Chinese government intends to maintain the stability of financial markets and plans to take measures to stimulate economic growth in the country, Xinhua news agency reported after a meeting of the Financial Stability and Development Committee of the State Council of China.

New Zealand’s GDP grew 3% (forecast +3.6%) quarter-on-quarter and 3.1% year-on-year in the fourth quarter of 2021.

Australian employment data for February 2022 showed an unemployment rate of 4%. Unemployment has fallen to its lowest level since 2008, increasing pressure for an early interest rate hike from the Reserve Bank of Australia.