The Federal Reserve raised interest rates, by 25 basis points, as expected. This was in an effort to stem surging inflation, driven by the global energy crisis, with more rises to come. This was welcomed by markets, with bond yields easing, from record highs, while equities turned positive. The US Dollar remained a safety target, with the EUR falling to 1.1460, while the GBP crashed to 1.3340. The Bank of England left rates unchanged following an inflation reading that was all but benign.
The rising reserve punished commodity currencies, with the AUD initially surrendering 0.7100, while the NZD slipped back towards 0.5700. Both have since recovered. NZD GDP growth was surprisingly positive, coming in at an annualised 2.6%, arraigning fears over the impact of the energy dilemma. The positive numbers were boosted by strong immigration numbers and will not be felt by the average punter, as household incomes plummet due to rising energy costs.
