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Hello and welcome to our slippery coverage of the global economy, financial markets, the euro zone and businesses.
Christmas is canceled! At least in the financial markets, where stocks are slipping today after rising interest rates from the US central bank, despite signs of a weakening global economy.
Last night, the Federal Reserve raised US interest rates to 2.25% -2.5%, the ninth increase since the financial crisis, ignoring Donald Trump's calls to control borrowing costs.
President Jerome Powell dismissed Trump's criticism, saying the Fed was safe from political pressure and would not let anyone stop it from doing the right thing.
But … many investors worry that the forecast of two further rate increases in 2019 is the false things to do.
As we blogged last night, the Dow plunged to its lowest level in 2018 after the decision. Wall Street fears that the Fed is making a big mistake by predicting further "progressive" rate hikes.
Powell gave us a lot to fear, warning that the US economy was facing "cross currents", such as weaker global growth and trade tensions.
Asian stock markets have already taken the news badly, with the Nikkei falling 3% to its lowest level in 14 months.
European markets will also take a bath: the FTSE 100 should dive 1.5%, which could bring it down to a new low in two years.
Powell's argument is that the US economy is expected to grow again next year, further reducing unemployment. In these circumstances, further rate increases may be warranted.
This is not the message investors wanted to hear. Powell's refusal to be intimidated by the collapse of markets has created a wave of sluggish markets.
Hussein Sayed, Chief Market Strategist at FXTM, Explain:
Despite many signs of slowing global economic growth, the Fed does not seem very concerned at this point, suggesting that monetary policy will continue to tighten, but at a slower pace than expected. What seemed even more worrying for equity investors is that Powell ignores not only Trump's calls to pause the tightening cycle, but he does not listen to them either.
Responding to a reporter's questions about market volatility, Powell said, "We do not look at any particular market. We look at a very wide range of financial conditions and what matters for the whole economy are significant changes in a wide range of financial conditions that are maintained over a period of time. "
Another central bank will be in the spotlight today: the Bank of England, which sets British interest rates at noon.
It is almost certain that borrowing costs will be maintained at 0.75%, but the minutes of this week's meeting could also displace the markets.
L & # 39; s calendar
- 9:30 am British retail sales figures for November
- 12h: Bank of England interest rate decision
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