Fed signals earlier interest rate hike. Federal Reserve (Fed) policymakers on Wednesday considerably raised their expectations for inflation this year and signaled they expect to raise interest rates by late 2023, sooner than they anticipated in March, as the economy recovers rapidly from the effects of the pandemic and inflation heats up. However, the central bank gave no indication as to when it will begin cutting back on its aggressive bond-buying program, although Fed Chairman Jerome Powell acknowledged that officials discussed the issue at the meeting. The forecast for higher rates in 2023 comes as the median estimate for gross domestic product growth in the year was raised to 2.4 percent from the 2.2 percent forecast in March. Core consumer price inflation is still expected to increase by 2.1 percent in 2023.
Eurozone inflation hits ECB target. inflation in the eurozone rose to the highest level in more than two years after economies across the region started to lift coronavirus restrictions and rebounding demand exacerbated supply bottlenecks. Consumer prices rose by an annual rate of two percent in May, more than economists predicted, from 1.6 percent in April, with energy prices gaining the most from a year ago when the region was in full lockdown. Germany, Spain and Italy - three of the four largest eurozone economies - all reported price increases. The European Central Bank targets inflation "below, but close to" two percent.
UK unemployment rate falls as lockdown easing spurs hiring. UK unemployment fell for the fourth consecutive month in April as businesses took on more staff in response to the relaxation of Covid-19 restrictions. The Office for National Statistics said on Tuesday that the jobs market showed further signs of recovery as non-essential shops and hospitality venues were allowed to open outdoors. The unemployment rate fell to 4.7 percent in the three months to April, representing about 1.6 million people, in a modest improvement from the 4.8 percent rate registered in the three months to March. However, this remains 553,000 below the levels recorded before the Covid-19 pandemic struck. Separately, UK inflation unexpectedly jumped above the Bank of England's target in May when it hit 2.1 percent, part of a post-lockdown rise in prices that is expected gather momentum.
China’s industrial output, retail sales miss expectations in May. Growth in China's industrial production and retail sales grew at less than expected rates in May, official data revealed on Wednesday. According to the government statistics, industrial production grew by 8.8 percent on a yearly basis in May, less than the economists' forecast of nine percent and April's 9.8 percent increase. Similarly, retail sales saw a 12.4 percent annual increase, which was slower than the expectations for growth of 13.6 percent. Sales saw an advance of more than 17 percent in April. During the January- May period, fixed asset investment increased by 15.4 percent from the same period last year. Economists had forecast investment to climb by 16.9 percent after gaining 19.9 percent increase in January to April. The combined hit from the pandemic, chip shortages and weak auto sales hit investment, production and retail sales in May, Iris Pang, an ING economist, said. This is expected to continue into June.
Malta’s inflation rises in May. Malta's EU measure of inflation rose in May, data from the National Statistics Office showed on Thursday. The EU measure of harmonized index of consumer prices (HICP) rose 0.2 percent year-on-year in May, following a 0.1 percent increase in April. Education cost gained 15.6 percent yearly in May and prices for clothing and footwear grew by 1.9 percent. Prices for food and non-alcoholic beverages, recreation an culture, and miscellaneous goods and services rose by 1.5 percent, each. On a monthly basis, the HICP grew by 1.3 percent during the review month.