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U.S. stocks were sinking on Thursday after the Federal Reserve signaled its higher for longer stance on interest rates.A...
12/15/2022

U.S. stocks were sinking on Thursday after the Federal Reserve signaled its higher for longer stance on interest rates.

At 10:20 ET (15:20 GMT), the Dow Jones Industrial Average was down 638 points or 1.9%, while the S&P 500 was down 2% and the NASDAQ Composite was down 2.3%.

The Fed said on Wednesday that its benchmark rate would likely top out above 5%, which is higher than expected just a few months ago, and indicated it wasn’t inclined to pause or pivot to rate cuts anytime soon. That is pressuring stocks as investors had hoped for the turn sometime in 2023.

The central bank raised rates by a half-percentage point, as expected, slower than the pace of hikes at its four earlier meetings this year. Chair Jerome Powell said there are some signs of inflation cooling but not enough to convince the policymakers that inflation was on its way to a sustained direction toward the target 2%.

Traders are expecting another two rate hikes next year, each of at least a quarter of a percentage point.

Data on Thursday indicated a steeper than expected drop in retail sales. Meanwhile, new unemployment claims dropped last week and were lower than expected. Both the European Central Bank and the Bank of England raised rates by a half-percentage point.

Shares of Tesla Inc (NASDAQ:TSLA) rose 1.3% after CEO Elon Musk disclosed another $3.6 billion in stock sales. The stock is down more than 55% this year.

Oil fell. Crude Oil WTI Futures were down 0.8% to $76.60 a barrel while Brent Oil Futures were down 0.7% to $82.16 a barrel. Gold Futures were down 1.6% to $1790.

By Geoffrey SmithThe Bank of England raised its key interest by 50 basis points to a new 14-year high of 3.50%, its late...
12/15/2022

By Geoffrey Smith

The Bank of England raised its key interest by 50 basis points to a new 14-year high of 3.50%, its latest shot at trying to tame rampant inflation without pushing the U.K. economy into a deep recession.

The step is smaller than the 75 basis point hike announced at the Bank's last meeting and reflects the fact that quarterly GDP growth has been negative for three months already but also reflects the fact that both inflation and wage growth remain uncomfortably high.

"The labor market remains tight and there has been evidence of inflationary pressures in domestic prices and wages that could indicate greater persistence and thus justifies a further forceful monetary policy response," the Bank said in a statement detailing its decisions.

Headline inflation fell by more than expected in November but at 10.7% remained far above the Bank's 2% target. Average earnings, meanwhile, are rising at their fastest rate since records began, except for a brief period during the pandemic.

Most of the MPC expects to have to raise rates further yet, the Bank said.

"Should the economy evolve broadly in line with the November Monetary Policy Report projections, further increases in Bank Rate might be required for a sustainable return of inflation to target," it noted.

The Bank said its nine-strong Monetary Policy Committee was split three ways, with six members voting for the 50 basis point hike, one (Catherine Mann) voting for a hike of 75 basis points, and two (Silvana Tenreyro and Swati Dhingra) voting to keep the Bank rate unchanged at 3.0%.

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