After a gain of 0.7% at the start of the session, the Paris Stock Exchange is showing itself to be the least feverish in reaction to comments from a Kremlin spokesman that the information evoking major progress in the talks with Ukraine are wrong. He nevertheless indicated that the negotiations are continuing on Thursday. According to the Russian Foreign Ministry, the two parties are discussing military, political and humanitarian aspects in particular. Hopes for a compromise had fueled hopes for a breakthrough yesterday
Around 11:30 a.m., the Cac 40 lost 0.14% to 6,580.46 points in a business volume of 1 billion euros.
The market had previously welcomed the Fed’s decision to raise interest rates for the first time since late 2018. The quarter-point hike in the federal funds rate, within the 0.25% range to 0.5%, was widely expected, much less the announcement that this turn of the screw will be followed by six others for this year alone, i.e. seven increases in total, i.e. at each of the meetings scheduled for 2022 Three more are planned for 2023 and one more the following year.
Jerome Powell was careful to insist that the US economy is strong enough to absorb these rate hikes, adding that he saw no risk of recession despite the surge in prices. Observers are also reassured by the determination of the Fed, like the Biden administration, to stem the inflationary spiral.
Inflation will remain high this year
” The Fed’s new economic projections suggest that its members are particularly concerned about the risk of underlying inflation remaining highreacted yesterday evening the firm Capital Economics, the median forecast being for core PCE inflation at 4.1% “. For the Fed, inflation will remain at a high level until the middle of this year and will take longer than expected to return to figures in line with the 2% objective. It is still seen at 2.7% at the end of 2023 (2.3% excluding energy and food). We will know more in May on the expected reduction in the size of the balance sheet, which peaks at nearly 9,000 billion dollars. Monetary policy will still be relevant this Thursday with the decision of the Bank of England, which will be announced at 1 p.m.