Asian stock markets mostly rose Monday ahead of what is expected to be a Federal Reserve decision this week to raise interest rates again amid investor hopes the U.S. central bank will scale back plans for more increases.
The Fed is widely expected at this week’s meeting to announce another rate hike of 0.75 percentage points, three times its usual margin. Investors are looking for signs’ officials are satisfied that earlier increases imposed to cool inflation that is near a four-decade high are working and future increases can be smaller.
Monday’s Eurozone inflation report will be in the spotlight. The Eurozone is to release its flash inflation estimate for October on Monday which is expected to come in at a record high of 10.2%.
Last Thursday the European Central Bank delivered its second 75-basis-point rate hike in a row and subsequent remarks by policymakers indicated that it would continue tightening in the coming months in order to prevent inflation from becoming entrenched, despite fears over a looming recession.
The European energy crisis precipitated by Russia’s war in Ukraine has exacerbated the economic effects of already high inflation resulting in a slowdown in consumer spending.
In the UK, the BoE looks set to raise interest rates by 75 basis points on Thursday – its eighth straight rate increase in a row as it battles inflation currently running above 10% – even as the U.K. heads for a recession that could be exacerbated by spending cuts under new Prime Minister Rishi Sunak.
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