Last week, German, Euro Zone and US inflation data were followed in global markets. Throughout the week, we have seen the markets follow the US Federal Reserve (Fed) and European Central Bank (ECB) interest rate decisions. In Germany, the consumer price index decreased by 0.1% monthly in May, while annual inflation was 6.1%. While the consumer price index in the Euro Zone did not change monthly in May, annual inflation was 6.1%. In the US, the consumer price index rose 0.1% month-on-month due to the drop in fuel prices in May, while annual inflation fell to 4% from 4.9%, the lowest level since March 2021.
In line with the expectations, the US Federal Reserve (Fed) did not change the policy rate, keeping it constant in the range of 5.00-5.25%. This is the first time the Fed has passed interest rates after raising rates 10 times in 15 months. Fed officials raised their interest rate expectations from 5.1% to 5.6% for 2023. Fed Chairman Powell stated that almost all Fed members approve of further rate hikes, and that additional rate hikes may be appropriate this year. In line with the expectations, the European Central Bank (ECB) increased the interest rates by 25 basis points, raising the overnight deposit rate to 3.50%, the refinancing rate to 4%, and the marginal funding rate to 4.25%. Thus, the bank continued its interest rate increase cycle in the 8th meeting as part of the fight against high inflation. The ECB stated that it will ensure that interest rates are at sufficiently restrictive levels in its future decisions. ECB President Lagarde stated that price pressures remain high, they have not finished their work yet, and there is still a long way to go.