Hawkish Fed: isn’t it too late?

News of the day, Tuesday, March 22

The Fed’s head, Jerome Powell, has announced the Federal Reserve is willing to raise the interest rate by 0.5% at the next regulator’s meeting. "If we conclude that it is appropriate to move more aggressively by raising the federal funds rate by more than 25 basis points at a meeting or meetings, we will do so." said Powell. The increasing “hawkishness” of the Fed’s chairman announcements is connected with raising economic uncertainty, e.g., skyrocketing energy sources prices, sanctions, and other issues related to the invasion in Ukraine. The highest since the 1980s inflation accelerates further, increasing Fed’s policymakers’ anxiety.

The market’s reaction was not long in coming: the Dow Jones Industrial Average fell 1%, S&P 500 decreased 0.6%, and Nasdaq Composite slid 1,1%.

The United States President Joe Biden has arrived in Brussels, set to persuade European leaders to ditch Russian energy sources. He has announced previously that the USA will ban Russian oil imports. However, such a decision is naturally a populist move since Russian fossil fuels share in America is rather modest compared with European consumption. If the supposed import ban takes place, it would mean a significant oil and gas prices increase for European countries. The agenda of the German government remains unchanged: Germany cannot dispense with Russian energy sources yet.

The price of Brent crude is $118.50, WTI — $112.50, GBP/USD — 1.3128, EUR/USD — 1.0961, and gold costs $1934.50 per ounce.