FirstFT: Fed implements first half-point interest rate rise since 2000

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The Federal Reserve raised its benchmark policy rate by half a percentage point for the first time since 2000 and sent a strong signal that it intended to increase it by the same amount at the next two meetings.

At the end of its two-day policy meeting yesterday, the Federal Open Market Committee lifted the target range of the federal funds rate to a range of 0.75 per cent to 1 per cent.

It was the first time since 2006 that the Fed has implemented rate increases at back-to-back meetings and came as the US central bank embraces a more aggressive approach to tackling high inflation.

The Fed raised rates a quarter of a percentage point at its March meeting from the near-zero level where it had hovered since the onset of the pandemic.

But top officials have backed a much more rapid withdrawal of the pandemic-era stimulus in light of one of the tightest labour markets in history and signs that price pressures are becoming entrenched.

Thanks for reading FirstFT Europe/Africa — George

The war in Ukraine

  • Expanding Nato: Russia has repeatedly warned of “serious consequences” should Finland and Sweden apply for Nato membership. What worries both countries is the period before security guarantees kick in.

  • Hungary hold-up: Budapest has threatened to block an EU plan to ban almost all imports of Russian oil, warning its economy would suffer. The plan would require unanimity among the 27 member states.

  • Cyber warfare: Moscow has assumed control over internet infrastructure in occupied Ukraine, making users’ data vulnerable to interception and censorship.

  • Russian missile strikes: Russian forces have conducted a second wave of cruise missile strikes targeting railways across Ukraine, Kyiv said.

A cat walks near a tank crewed by a pro-Russian militia in Mariupol © Alexei Alexandrov/AP

1. Archegos considered becoming biggest Deutsche Bank shareholder Archegos Capital Management, the family office that imploded , considered becoming the largest shareholder in Deutsche Bank by taking over a stake controlled by HNA in 2018. Then Deutsche chair Paul Achleitner wooed Archegos co-founder Bill Hwang as the bank searched for an investor to replace the Chinese group.

2. UK ports want compensation for ‘white elephant’ border posts British ports are demanding compensation from the government after a delay in implementing post-Brexit border checks by 18 months left them with empty high-tech facilities that risk becoming multimillion-pound “white elephants”.

3. Airbus shrugs off war and supply chain disruptions Airbus is pushing ahead with aggressive plans to increase production of its popular A320 family of jets as it shrugs off concerns over the war in Ukraine and supply chain strains. Chief executive Guillaume Faury said Europe’s plane maker would increase output by 50 per cent by 2025.

4. StanChart shareholders protest against executive pay Almost a third of Standard Chartered’s shareholders voted against executive pay resolutions, which ultimately passed, at the bank’s annual meeting, after proxy advisers criticised the bank for not cutting top managers’ bonuses enough in the wake of a record UK regulatory fine.

5. UK-German trade falls sharply since Brexit vote Trade between Germany and the UK has dropped sharply since 2016 and lags overall import and export levels in both countries, signalling that British manufacturing is facing increased hurdles in its interactions with the EU’s biggest economy.

Coronavirus latest

  • Moderna has targeted an autumn release for an Omicron-focused vaccine, as it said up to 1.7bn people at high risk would benefit from annual boosters.

  • Pyongyang has warned that “not even a tiny crack or mistake” is allowed as North Korea persists with its extreme isolation strategy.

The day ahead

BoE meets A 25-basis point increase is expected when the Bank of England’s Monetary Policy Committee meets, which would bring rates to their highest level since 2009. Market Questions has more.

UK local elections Voters go to the polls to select local authority representatives in England, including all 32 London boroughs, as well as Scotland and Wales, and for assembly seats in Northern Ireland.

Economic data S&P Global releases its April UK services purchasing managers’ index, as well as eurozone productivity and construction PMIs. Germany has March factory orders. Eurozone retail sales fell in March, adding to stagflation concerns, but services activity accelerated in April.

Johnson hosts Kishida UK prime minister Boris Johnson meets his Japanese counterpart Fumio Kishida today. The pair are expected to discuss sanctions on Russia and military co-operation. (NHK)

Corporate earnings Air France-KLM, Anheuser-Busch InBev, ArcelorMittal, Axa, BMW, ConocoPhillips, Kellogg, Lufthansa, Shell and Société Générale release first-quarter results, while News Corp has financial third-quarter earnings and Virgin Money half-year results.

What else we’re reading

The man who would replace Erdoğan If there were any doubts about Kemal Kılıçdaroğlu’s determination to take on Turkey’s president, Recep Tayyip Erdoğan, they were dispelled last week. With a critical election due within the next 13 months, he warned unnamed rivals within his opposition alliance: “Either join me or get out of my way.”

Protesters march in Istanbul
Protesters march in Istanbul over a court ruling sentencing philanthropist Osman Kavala to life in prison after being convicted of trying to overthrow Recep Tayyip Erdoğan’s government © Ümit Bektaş/Reuters

British workers lose their grip on tips UK ministers are shelving plans to ensure that workers keep their tips, despite having promised action six years ago. Paul Scully, business minister, announced in September that the government would take action to make it illegal for employers to withhold gratuities from workers.

Johnson’s performance in spotlight in local UK polls Boris Johnson’s political future will come under intense scrutiny after local elections across the UK today, as Conservative MPs unpick the results and gauge whether the prime minister is still a winner in the wake of the partygate scandal and a cost of living crisis.

Twitter isn’t the town square, it’s the theatre Anxieties about Elon Musk’s acquisition of the social media platform are based on a lofty view of it, writes Jemima Kelly. While Twitter might be the obsession of adult journalists, puerile billionaires and toddlerish presidents, it is not much cared about by the majority.

Alibaba targets bargain-hunters The ecommerce giant became the go-to online emporium for consumer goods in China mostly by focusing on shoppers in wealthy cities. But as growth slows from competition and regulatory pressures, the group has turned to the estimated 930mn consumers in less affluent cities to boost lagging sales.

Food and drink

This method for cooked eastern coffee might change your coffee life forever.

An affogato being prepared
Cardamom has a cooling, almost numbing effect that is amplified in the ice cream and, when hot coffee is poured on, there’s some real yin-yang going on © Patricia Niven

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