Global markets focused on US Fed's interest move

ISTANBUL

While the COVID-19 situation and inflationary concerns continue to impact global markets, investors and analysts are zeroing in on the US Federal Reserve’s interest rate decision on Wednesday.

Analysts expect the Fed will not change interest rates but may accelerate its drive to reduce bond purchases as inflation hits an almost 40-year peak and producer prices touch record heights.

Analysts emphasized that it is critical for Fed Chairman Jerome Powell to maintain his hawkish stance and give clues about the 2022 interest rate path in what will be the US central bank’s last meeting this year.

Any decisions and statements from the US could increase the volatility being witnessed in global markets.

A Tuesday report by the Labor Department showed producer prices in the US vaulted 9.6% on an annual basis in November, ramping up fears of breakneck inflation and sparking a slump in stock markets.

In the European Union, improved industrial production figures did little to deter a decline in stock markets amid uncertainty over natural gas supplies and a worsening COVID-19 crisis.

Natural gas prices surged above €120 ($135.2) after indications that the Nord Stream 2 pipeline may not get the green light.

Asian stock markets also ended Tuesday with mixed figures.

Industrial production figures released by China on Wednesday exceeded expectations with a 3.8% year-on-year jump in November, along with a 3.9% increase in retail sales.

China’s central bank has also injected 500 billion yuan (over $78.5 billion) in markets through medium-term loans.

In Turkey, the Borsa Istanbul registered a 2.68% spike to close Tuesday at a new record of 2,157.74 points.

*Writing by Gokhan Ergocun