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brokerhive-The Fed pauses its rate hikes, rising inflation in the eurozone triggers volatility in global markets
industry7 months before
Summary：The Federal Reserve kept interest rates unchanged this week, which caused mixed reactions in global markets. At the same time, inflation in the eurozone unexpectedly rose, bringing greater policy pressure to the European Central Bank. Investors are closely watching the trend of foreign exchange and stock markets against the backdrop of geopolitical uncertainty and weak economic data from China.
June 17, 2025 brokerhive
Against the backdrop of the Federal Reserve announcing that it would keep interest rates unchanged and eurozone inflation rising beyond expectations, global financial markets showed divergent performance today.
The Federal Reserve kept its benchmark interest rate at 5.25% as expected, but Chairman Powell's neutral remarks suggested that high interest rates may remain for longer. The U.S. stock market was generally flat, and the 10-year U.S. Treasury yield rose slightly, indicating that the market's wait-and-see sentiment has increased.
Meanwhile, the eurozone's annual inflation rate rose to 3.2% in May, higher than market expectations. Energy and food prices became the main driving factors, triggering market concerns about the European Central Bank (ECB) delaying interest rate cuts.
"This set of inflation data caught the market off guard," said Clara Reinhart, chief economist at Axis Global in Germany. "Against the backdrop of weak German and Italian economies, the ECB's policy path has become more complicated."
In Asia, China's industrial output fell short of expectations for the third straight month in May, highlighting weak domestic demand. The yuan continued to weaken against the dollar, with limited intervention by the Chinese central bank.
Most emerging market currencies fell, with the South African rand and Brazilian real leading the decline. International oil prices rose 1.3% due to tensions in the Middle East and a drop in US inventories.
Currently, investors' focus has shifted to the upcoming Jackson Hole Global Central Bank Annual Meeting, and the market expects to obtain the next policy clues from the speeches of officials from various countries.
Daniel Marchesi
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