It is, once is not custom, with great enthusiasm that Wall Street welcomed the decision of the Fed, Wednesday evening, to raise its interest rates. The quarter-point increase in key rates, in the range of 0.25% to 0.5%, was widely expected, much less the announcement that this tightening of the screw will be accompanied by six others for this year alone , i.e. seven increases in total, i.e. at each of the meetings scheduled in 2022. Three others are anticipated in 2023 and one more the following year. In the previous median estimate, three rate hikes were expected this year, three more next year and two in 2024.
The Federal Reserve could even go even faster, Jerome Powell, the president of the central bank, said during his press conference, if the evolution of inflation requires it. ” 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.
The solidity of the economy allows it
For operators, the message is clear, the American central bank, like the Biden administration, has made it a high priority to fight inflation and it will therefore be able, according to projections and taking into account the actions envisaged by the Fed, to return almost in the nails from the end of next year (target of 2%). The message was appreciated, especially since Jerome Powell’s remarks indicating that the country’s economic situation is strong enough to be able to absorb these rate hikes. At the close, the Dow Jones climbed 1.55% and the Nasdaq Composite nearly 3.8%.
In the process, Tokyo also grew by more than 3%. Futures contracts, in Europe, point to a slight increase at the opening. At more than 6,600 points, the Cac 40 would return to less than 3% of its levels before the start of the Russian invasion in Ukraine (6,780.67 points).
On this front, discussions still seem to be continuing between Moscow and kyiv, even if on the ground the fighting continues, especially with the latest attack on Mariupol. Yesterday the FinancialTimes referred to progress towards the development of a 15-point interim peace plan for a ceasefire and a Russian withdrawal based on Ukraine’s acceptance of neutrality, a renunciation of membership to NATO and the acceptance of certain restrictions concerning its armed forces. Ukrainian President Zelensky also said yesterday that the peace talks seemed more realistic, but that time was still needed.
First forecasts for the new Veolia
The program of the day is loaded, between the monetary policy decision of the Bank of England, at 1 p.m., the final inflation figures in the euro zone for the month of February and some statistics in the United States (weekly registrations unemployed, Philly Fed index of activity in the Philadelphia region and industrial production).
On the business side, we expect this Thursday the quarterly publications of FedEx and Accenture across the Atlantic. In France, Veolia Environment was the last component of the Cac 40 to present its 2021 figures. We were mainly waiting for the 2022 forecasts, which include Suez. The environmental services group expects an increase of nearly 10 billion euros in billings, from 28.5 billion in 2021. Current net profit would increase by more than 20% this year.
Airbus became interested, as Thalesto the cybersecurity branch ofAtos.