More hikes are likely in the coming months, but the Jerome Powell hinted at a slight change in its very hawkish stance. “ In determining the pace of future increases in the target range, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments”, the statement said.

However, this wasn’t enough for markets, since Wall Street ended deep in the red. Investors had hoped that there would be a clearer message that the Fed would ease the pace of its rate hikes very soon, but Powell dampened the mood when he said it was "very premature" to think about a pause.

As a result, the FTSE 100 was down this morning. The index was also hampered by lower commodity prices, after the Times reported that the new UK government was planning to extend windfall taxes on oil and gas companies, and after Chinese authorities reiterated their commitment to the zero-Covid policy.

The Bank of England is expected to hike its rates by 75bps today.

 

Things to read today:

Fed should make clear that rising profit margins are spurring inflation (Financial Times)

China Stocks Rally Cut short amid Signs Covid Zero Here to Stay (Bloomberg)

Fed Tries to Thread the Needle, Drawing Blood (WSJ)