FT News Briefing ECB to raise interest rates for first time since 2011
Jun 10, 2022
Recent US consumer prices are on the rise, while the European Central Bank prepares for its first interest rate hike in over a decade. Inflation pressures tied to the Ukraine conflict are causing ripples across global markets. Meanwhile, China is battling skepticism about its COVID vaccines by introducing vaccine insurance to boost public confidence in vaccinations. The challenges of poor quality and transparency in Chinese vaccines further complicate trust issues, especially among the elderly population needing protection.
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US Inflation Concerns
- US stocks fell sharply, with the S&P 500 down nearly 2.5%, as investors anticipate new inflation data.
- The consumer price index is expected to show a 0.75% jump in May, exceeding April's increase.
Factors Driving Inflation
- Monetary policy's impact on inflation is delayed, and unforeseen factors like the war in Ukraine have sustained price pressures.
- Services-related inflation, such as travel and rent costs, also contributes to the persistent rise.
ECB's Rate Hike Plans
- The ECB plans its first rate hike in over a decade, a quarter-point increase next month, potentially followed by a more aggressive half-point rise in September if inflation persists.
- This proactive signaling from the ECB represents a shift from its previous wait-and-see approach.