The U.S. Federal Reserve remains committed to March interest hikes despite the geopolitical war between Russia and Ukraine.
The Russian Ruble has lost 30% of its value, and the Russian stock market has plummeted by 40% of its market value. The U.S president says that Russians won’t know what hit them, and the only one to blame is the Russian president, Putin. The U.S. and its allies are now taking more serious and extensive sanctions. It’s an economic wild sanction. They will seize every Russian asset on the market.
The market is having a mixed performance today. Brent crude increased to $110 a barrel today. Energy prices are soaring, and the uncertainty level is increasing. As for American investors, they are uncertain about the market’s path at the current time. Experts believe that the current Russian war and March interest hikes will put some strains on the U.S. economic recovery.
This morning, Federal Reserve speaker Jerome Powel said that the Federal Reserve remains committed to March interest hikes despite the current geopolitical developments. Hours after Jerome’s talk, U.S bonds fell, and the U.S stock index rose. According to Reuters, the U.S stock index gained more than 1% this morning, showing increases in all big industries. Tech stocks jumped by 1.22% thanks to Apple’s gains and this week’s remarkable revenues. The S& P index rose by 1.72%, after declaring that the index had entered the correction territory last week.
As for the Dow Jones industrial futures, this morning its index rose by 1.72%, this positive result came hours after Powel reinsure of the Federal march hikes. Powel added that based on the current events that are drifted by the ongoing war between Russia and Ukraine and its supporters, it’s likely that March hikes will be by 25 basis points.
Traders now can rest assured that there won’t reach a full percentage hike in these next few weeks. After recent events of the last few days, traders were a bit anxious about how aggressive the Federal Reserve would be. However, Powel has guaranteed that the maximum interest rate increase will be 25 basis points.
The Feral Reserve representatives commented that the Federal strategy is to slightly increase the interest in ways that they can control before things start to loop back negatively. According to February data, it seems the U.S. labor market is taking baby steps toward a full or near-full recovery. The data for February showed strong hiring in the private sector, beating all expectations.
The Federal Reserve aims to shrink and lower the inflation rate and decrease the pressure on manufacturing industries. The COVID outbreak is decreasing day by day. Now workers are rejoining the workforce, which is expected to increase work productivity. Major industries in the U.S. are struggling with commodity price increases and an increase in energy prices. The U.S. and major countries are now coordinating to deploy and release their oil and gas reserves. On Monday sanctions declared that the European Union won’t buy or make any transaction with Russia that includes its exports.
So, the next step for the U.S. and its allies is to find a solution to that since Russia is the world’s second natural gas exporter.
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