Bassanese Bites: RBA to hike 0.15% next week – April 26 2022

Global Markets

It was a familiar story last week, with global equities again under pressure from the onslaught of hawkish rhetoric from central bankers. The highlight was no less than U.S. Fed Chair Powell hinting at a 50 basis point rate hike at next week’s Fed meeting. Of course, the bond market has been pricing this risk for sometime (it is also pricing in a 50bps move in June), but it seemed the equity market could not quite believe it until Powell himself effectively confirmed the fact. Not to be outdone, Fed President Bullard suggested a 75bps hike next week was also possible!

Meanwhile, hopes of a timely easing in “supply chain bottlenecks” are being quashed by the ongoing war in Ukraine and China’s renewed round of COVID lockdowns. Although it’s quite possible U.S. headline inflation has peaked, most partial pricing indicators suggest cost pressures remain high – and inflation may remain uncomfortably high for much of this year.

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