Despite declining consumer prices, the Fed continues its fight against inflation, albeit with reduced vigor.
Yet, the series of rate hikes has not stopped the world’s largest economy from growing.
However, the recent rise in global gasoline prices could be a curve ball for global central banks already battling a gritty inflation that is forcing many people to postpone retirement.
Here’s a rundown of some of the headlines that shook financial markets this week.
The Fed raises interest rates.
The Federal Reserve of the United States raised its key interest rate for the eleventh time in seventeen months. The Federal Reserve announced on Wednesday that it had increased its key interest rate by 0.25 percentage points to a maximum of 5.5%, the highest level in 22 years.
Though consumer prices have decreased for twelve consecutive months, they increased by 3% year-over-year in June. The interest rate increases are intended to curb inflation, but carry the risk of going too far and triggering a recession.
Analysts believe that the Fed is still open to increasing interest rates further when it holds its next monetary policy meeting for the year on October 31st.
US economy continues to grow.
The United States experienced stronger-than-expected economic growth in the second quarter of 2023, despite the Federal Reserve’s aggressive interest rate hike campaign.
According to preliminary data released by the Department of Commerce on Thursday, the world’s largest economy grew 2.4% on an annualized basis between April and June.
That represented an acceleration from the 2% growth rate in the first quarter and was significantly higher than the 1.8% growth rate forecast by economists.
After an unusually robust start to the year, growth in consumer spending moderated, but this was more than offset by robust business investment in inventories and fixed assets.
Job vacancies in Canada fall to a 2-year low.
The number of open jobs in Canada dropped by 26,000 to a two-year low of 759,000 in the month of May. This is down nearly a quarter from that point.
Health care, social support, and lodging and food services had the fewest job openings. On the flip side, manufacturing, banking, insurance, and small businesses posted more job openings.
As the economy slows down and interest rates go up, businesses are finding it easier to find workers. Record immigration numbers may also be helping businesses ease their labor stress and fill positions.
Gasoline prices begin to rise around the world.
Gasoline prices are starting to rise globally, a sign that central banks and governments around the globe see as inflationary. On the Futures market, gasoline prices in New York have soared to a nine-month high, sending shock vibrations through the pump, while prices in Asia have also risen.
Gasoline prices are a frequent source of contention, as they are an essential daily expense for many individuals, along with food and housing. The combination of unanticipated refinery outages and lower-than-usual inventories in key storage centers is driving up gasoline prices.
More people plan to work after retirement.
A new BlackRock study shows that nearly 30% of retirement savers now plan to work longer because of the economy.
Many people who are saving for retirement aren’t sure where to put their money because interest rates are going up and the stock and bond markets didn’t do well last year.
31% of younger workers report being off track, which highlights how the change is particularly affecting them.
Twitter, X has officially retired its famous blue and white bird logo.
X, formerly known as Twitter, has officially retired its iconic blue and white bird logo.
Late Friday night, the icon on the mobile app changed to an “X” as part of the latest phase of a comprehensive rebranding that platform owner Elon Musk announced last month.
The company previously debuted the logo on the web and launched the domain X.com, though Twitter.com remains active.
The transition from Twitter to X reflects Musk’s desire to transform the platform into what he has termed an “everything app.”
Meta posts highest quarterly sales since 2021.
Meta Platforms, the parent company of Facebook, Instagram, and WhatsApp, posted its highest quarterly sales growth since 2021.
The ad revenue of the social media behemoth grew by about 12% in the most recent quarter, a turnaround driven by the enhanced use of artificial intelligence technology that has enabled more precise ad targeting.
The social media giant’s advertising revenue increased by about 12% in the most recent quarter, as digital advertising continued to recover. This marks a turnaround in Meta’s revenue, which suffered a $10 billion loss in sales after Apple’s privacy changes in 2021.
Ford warns of higher than anticipated loss in its EV business.
Ford Motor Company has warned that its electric vehicle business will lose more money than planned.
The car company had said before that it would lose $3 billion this year. Ford now thinks that its electric vehicle business, Ford Model e, will lose about $4.5 billion this year.
On Thursday, investors and analysts were given a briefing about the automaker’s new way of reporting financial information. During the meeting, the expected loss was discussed. The company said it is still on track to reach a pretax margin of 8% by the end of 2022, even though it raised its yearly pretax profit forecast.
Ford wants to sell four times as many gas-electric hybrids in the next five years. This is because the company is trying to lower the price of its first-generation battery electric cars, which are losing money.
Spotify’s losses deepen.
Spotify’s losses are getting worse as the company cuts back on podcasts and has to pay more for music royalties.
The streaming giant easily beat expectations for subscriber growth in its last quarter, thanks to Gen Z and listeners from other countries. However, it missed its income goal and gave a weaker-than-expected outlook for the current quarter.
The company is trying to make more money by putting less money into podcasts and charging more for subscriptions. Spotify said on Monday that it will raise the price of its premium service in the U.S. from $9.99 a month to $10.99 a month.
Photo by Toa Heftiba on Unsplash