The European Central Bank (ECB) and the Bank of England (BOE) meetings are today. Both central banks will release their future policy plans. Market participants expect the ECB to increase its interest rates. The bank will likely plan several other hikes over the following months. However, analysts argue about the size of these increases.
Soaring inflation has plagued the eurozone, forcing the central bank to hike rates at a record pace. The economic recession caused by the coronavirus pandemic weighed heavily on Europe. The energy crisis that followed Europe sanctioning Russia for its invasion of Ukraine made the situation worse.
Economists expect the ECB to raise rates by a percentage point, reaching 2.5% overall. The bank hinted at such an increase in December. However, ECB President Christine Lagarde will likely have to answer questions about smaller rate hikes from March.
The U.S. Federal Reserve already announced on Wednesday that it’s going to slow the pace of its aggressive policy. The agency didn’t have much leeway as the country was starting to shift toward an economic recession. Some new data also showed there might be problems in the eurozone as well. While the Fed hiked rates yesterday, it also stated that inflation was lowering at last. There is no need for higher rate hikes any longer.
Layoffs skyrocketed to a two-year peak in January. Why’s that?
A new report showed that layoffs number jumped to more than a two-year high last month in the United States. That number hit markets hard. According to the survey, tech companies cut jobs almost at a record pace. They are trying to prepare for a possible economic recession. As a result, 102,943 employees lost their jobs. That’s almost double compared to December.
Analysts noted that unless the Fed starts shifting from its aggressive rate-hiking police faster, the layoffs will likely continue. Blue chip companies, such as Amazon and Microsoft, cut thousands of jobs in January, blaming layoffs on decreased consumer demand.