Experts and stakeholders believe that benchmark interest rates in the United States, the UK, and the eurozone will rise to their highest levels since the financial crisis 15 years ago.
The US Federal Reserve, the Bank of England and the European Central Bank have been tightening their monetary policies since 2022, after Russia invaded Ukraine in February end. However, the rate of increases has slowed down with the arrival of 2023, since unemployment rates are still low and inflation has moderated.
In December 2022, Fed officials forecasted raising interest rates above 5% in 2023 and maintaining them there for the remainder of the year. After the projected increase in February 2023, the federal fund’s target rate will range between 4.5% and 4.75%, as the Federal Reserve raised its target interest rate by a quarter of a percentage point during its recent monetary policy meeting.
Several datasets, including benchmark employment statistics from the US Department of Labor, are anticipated by investors in February 2023.
There are still concerns that a hot labour market and recent wage growth may temper the Fed’s efforts to prevent the economy from running too hot, even though gains in the country’s consumer price index have significantly slowed.
Before 2023, inflation in the United States hadn’t been this high since 1982. The German economy is headed for a harsh winter.
Germany’s largest economy appears to be heading for a recession barely two weeks after German chancellor Olaf Scholz declared he was “absolutely convinced that this will not happen—Germany going into a recession.”
In contrast to expectations for a flat fourth quarter, Germany’s GDP contracted by an adjusted 0.2% from the third quarter.
A slight recession became much more possible due to the slowdown, which German Economic Minister Robert Habeck attributed to rising energy costs brought on by Russia’s invasion of Ukraine. February 2023 will reveal whether or not it will be sufficient to cause the ECB to change its anticipated course for rate hikes.