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Thursday, 17 March 2022

THIS MORNING: First Fed rate hike in 4 years; The clocks won’t go back in the US next year.

Well, friends, we’ve nearly made it through another workweek together, and our reward is ending the week on St. Patrick’s Day (which happens to be The Colonel’s birthday. We miss you, Dad.)

THE BIG GLOBAL BUSINESS STORY this morning- The Fed has hiked rates for first time in four years — and there’s plenty more where that came from: The Federal Reserve raised interest rates by 25 bps at its policy meeting yesterday and signaled that similar hikes would take place at each of its six remaining meetings this year. In the first hike since 2018, the Federal Open Market Committee announced that it had raised the federal funds rate to 0.25-0.50 as it battles the highest levels of inflation in 40 years. The central bank will also start reducing its holdings of treasuries and mortgage-backed securities at a coming meeting, the statement said.

The most aggressive tightening cycle in decades: The committee indicated in the dot plot (pdf) that rates could end the year close to 2% and reach 2.75% in 2023 in what would be the fastest spell of tightening in decades. Seven members of the committee want the central bank to go even further, raising the possibility of a 50 bps hike later in the year.

US stocks rallied on Fed chair Jerome Powell’s positive comments on the economy: The S&P 500 completed its strongest two-day rally since April 2020 after Powell told a press conference that the “economy is very strong” and that the probability of a recession remains low, Bloomberg reports. The Nasdaq 100 jumped 3.7% and the Dow rose 1.5%.

The story is all over the front pages of the global business press this morning: Bloomberg | FT | WSJ | CNBC.

The Fed wasn’t the only central bank to hike rates yesterday: USD-pegged Gulf economies including the UAE, Saudi Arabia, Kuwait and Bahrain all followed the Fed and raised rates by 25 bps.

REMINDER- The CBE will hold its policy meeting next Thursday, 24 March, and almost all the analysts we’ve heard from so far are expecting policymakers to hike interest rates. We’ll have more for you on this on Sunday when we publish our customary interest rate poll.

THE MARKETS TODAY- US shares are on course to dip when the markets open later today, while bourses in Europe will see early gains, according to the futures markets.

Over in Asia: Shares in China are continuing to surge this morning following yesterday’s session which saw bourses have one of their best days since 2008 on market-friendly comments made by the country’s top economic policymakers (more on that in Planet Finance, below). The Hang Seng is currently up 5% while the Nikkei is up nearly 3%.

WHAT’S HAPPENING TODAY-

The Central Bank of Egypt (CBE) has published (pdf) a raft of recommendations urging Arab banks to ramp up SME financing, following a conference on the topic in partnership with the Union of Arab Banks. The CBE recommends that central banks in Arab countries help local lenders boost infrastructure for SME lending, give banks incentives to extend credit to SMEs, and help cover the associated risk. It also called on states to provide more tax and non-tax incentives to SMEs, and on the AUB to set up an SME committee. The CBE also called for a regional digital platform to help streamline SME registration and licensing procedures.

Stepping up to the plate: The CBE has launched a new financing program — Daman — to support SMEs in Upper Egypt, in partnership with Egyptian banks, the central bank announced at the conference. Daman’s first launching pad will be in Qena governorate.

Buckle up for Air Sphinx: EgyptAir’s low-cost subsidiary will reportedly commence operations within days, Al Borsa reports, citing Mohamed Montaser, Vice Chairman of the Egyptian Businessmen’s Association’s tourism committee. The airline will operate four planes in an initial phase.

America could make daylight saving time permanent next year after the US Senate unanimously passed a bill that would make it permanent starting 2023, putting an end to the biannual ritual of springing forward / falling back, the New York Times reports. Backers of the legislation say the move would lead to brighter afternoons and make people more productive. The House of Representatives will need to okay the bill before it is signed by US President Joe Biden.

Will other major economies follow? Canada, the United Kingdom, France and Italy still use daylight saving time — Japan doesn’t. Egypt dumped time changes in 2016, with the peak of DST madness having come in 2014, when clocks changed four times in one year (forward in spring, back for Ramadan, forward again after Ramdan, and then back in fall at the end of DST).

ADDICTED TO THE PANDEMIC? The World Health Organization and major international media outlets are warning that it’s too early to let down our guard against covid, pointing to surging case numbers in China and the prospect of yet another omicron wave in Europe.


Nickel trading reopened — and was immediately suspended again after more chaos: An “IT system error” yesterday caused the London Metals Exchange (LME) to halt nickel trading immediately after it was reopened following a weeklong suspension, it announced in a statement (pdf). Prices plunged below the 5% daily limit after the market opened yesterday forcing the exchange to halt trading for six hours. The LME suspended trading of the metal earlier this week after market volatility saw its price treble in just two days as global commodities were rocked by the conflict in Ukraine

CIRCLE YOUR CALENDAR-

EV-charging bid deadline extended: The Public Enterprises Ministry has extended the deadline for sending in expressions of interest for experienced companies that would like to manage the soon-to-be-established EV charging stations company, the cabinet announced in a statement. Interested companies have until Thursday 24 March to send in their letters. Three companies have told the government they want to take part in the project so far, according to the statement.

Check out our full calendar on the web for a comprehensive listing of upcoming news events, national holidays and news triggers.

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