020 7898 0500The main highlight of yesterday was the Fed’s interest rate decision. As expected, policymakers voted to hike rates by 25 basis points to 2%. Prior to Tuesday’s inflation release, which showed it had hit its highest mark for six years, the markets had priced in an 85% probability of a rate hike, but the increase in inflation served to make it even more certain.
Less certain, however, was what the accompanying sentiments would be at the press conference. Powell pointed to a robust economy, healthy jobs market and solid economic activity. He did say that the Fed would be factoring in financial and international developments in future rate decisions, but it is expected there will be two more rate hikes in 2018.
Today we will see the retail sales figures for May. Month-over-month, they are expected to increase from 0.2% to 0.4%, but it will be interesting to see what the year-on-year figure is. Last month, it came in at a hugely impressive 4.6%, so if it falls back from that, the question is by how much?
