European Markets On Hold As Investors Await US Inflation Data

credit: ft

Europe (Parliament Politic Magazine) – The European markets in light of the federal reserve’s meeting awaits the policy making results from the state while shunning the investors as they await the revelation reports for the United States inflation reports.

The pan-European Stoxx 600 was down 0.1% by early afternoon, with telecoms shedding 0.7% to lead losses while media stocks added 0.6%.

Economists anticipate that the headline consumer price index held steady in November compared to the previous month, and predict that it grew by 3.1% on a 12-month basis.

The latest data is coming in as the United States of America begins its two days’ federal reserves meetings where it will put forth its latest economic policies, interest rates and major economic issues projections.

The Asia pacific markets lead the Tuesday markets with the Japanese markets topping the gains for the second straight day while the United States market is facing depression and thriving to survive through another inflation round.  

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The Federal reserve meeting:

The two-day federal reserve meeting is on its way to begin interest rate cuts in 2024, in hope of a soft landing and decreased inflation rounds in the markets. The federal reserves will begin the rate cuts in June of next year.

In response to these latest developments multiple economist experts have put forth there responses to the developing policies;

John Ryding, chief economic advisor to Brean Capital states in his statement “The Fed needs to begin laying out a road map to rate cuts that may represent tighter policy since cuts will be lagging the decline in inflation and real rates will be rising,”

While, Kathy Bostjancic, chief U.S. economist at Nationwide says, “The markets have prematurely priced in high odds of rate cuts starting in Q1, but we do expect further steady disinflation will lead the Fed to begin rate cuts around mid-year.”

“I still believe (Powell) has the memories of the 1970s in his mind and will be more stubborn in keeping monetary policy tight for longer than markets want him to be,” said Peter Boockvar, chief investment officer at Bleakley Financial Group.

Michael Englund of Action Economics in their writings state that, “The U.S. headline y/y inflation metrics will fall sharply into early-2024 thanks to weakness in energy prices and easier comparisons, leaving the Fed with significant elbow room to start tightening even if core year over year inflation rates remain firm.”

Inflation though is forecast to decline but the softening in hirings, income growth and confidence will add on to reduce the consumer and business spendings. Another wild card for the global markets in next year is whether the federal reserves will end its quantitative tightening policies in which it has been reducing its balance sheet to tighten monetary policy by allowing the bonds on its balance sheet mature without replacing them.

Beth Malcolm

Beth Malcolm is Scottish based Journalist at Heriot-Watt University studying French and British Sign Language. She is originally from the north west of England but is living in Edinburgh to complete her studies.