Fed says inflation is no longer transitory

XTB Analysis Team XTB Poland

While investors were waiting for several data releases yesterday, many were surprised by FED Chairman Powell's comments relating to inflation, quantitative easing and the ongoing concerns tied to the new omicron variant. The central banker has decided to change his tone on inflation and now said that it is time to stop using the term transitory, a term he and many other central bankers have used to calm markets, when referring to the ongoing rise in prices. No surprises are expected in today's testimony but with the current risk moods, any further indications of a change in monetary policy moving forward could add pressure to the markets as they contend with growing uncertainty and mixed data.

Nationwide HPI continues to rise

Today’s Nationwide HPI showed a slight increase in house prices with annual house price growth increasing in November to 10.0% after a 0.9% MoM increase while also showing a 30% drop in housing transactions. The index continues to highlight rising inflation along with its impact on different sectors of the economy and while focus in recent days has been on the new variant, today’s HPI could add pressure to the Bank of England to potentially take action in the near future by adjusting it’s policy to control the extent of the impact.

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XTB Analysis Team

XTB Poland

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