March 17, 2021
19:30
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The Federal Reserve’s interest rate decision and economic outlook have been welcomed by the financial markets. The US central bank expects higher growth and lower unemployment this year.
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As expected, the Federal Reserve pledges to keep interest rates between 0 and 0.25 percent and to continue bond purchases until substantial progress is visible in full employment and price stability.
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On the other hand, the Fed has come up with a better than expected outlook for the US economy. He now expects 6.5 percent growth this year and 3.3 percent in 2022. In December, the central bank only expected 4.2 percent growth this year. However, economic activity and employment have improved. Unemployment is expected to fall to 4.5 percent – against an earlier forecast of 5 percent – before falling further to 3.9 percent in 2022.
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The Fed does see inflation accelerate to 2.4 percent this year and then stabilize around 2 percent in the following years. The inflation forecast has thus risen sharply: in December the Fed was expecting only 1.8 percent inflation in 2021, 1.9 percent in 2022 and 2 percent in 2023. As a result, more members of the Federal Open Market Committee (FOMC) now are in favor of a faster rate hike. Read: as early as 2022.
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The interest on ten-year US government paper fell after the interest rate decision. On Wednesday, 1,676 percent was reached, the highest level in 13 months. Markets fear President Joe Biden’s massive stimulus plan will overheat the US economy.
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The Federal Reserve’s interest rate decision was followed by a positive stock market reaction. The Dow Jones gained and losses from the S & P500 and Nasdaq Composite narrowed significantly. At around 7:25 pm the Dow Jones gains 0.5 percent, the S & P500 remains stable and the Nasdaq Composite drops another 0.3 percent.
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British Uber drivers
Company news is scarce. The McDonald’s burger chain
wins 2 percent after Deutsche Bank raised its price target to $ 244 and moved its advice from ‘keep’ to ‘buy’. According to the analysts, the chances of McDonald’s still conquering market share are underestimated.
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Uber Technologies
reverses 4.2 percent. The alternative taxi service has more than 70,000 UK drivers a status of ‘salaried employees’ awarded. From now on, they enjoy a minimum wage, are entitled to paid leave and have access to a pension fund. Uber had to accept that after a court ruling. The question is whether Uber drivers in other European countries will also demand a better status.
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Tesla
initially suffered from advancing German competition for electric cars. The VW group wants to sell 1 million e-cars this year. BMW unfolded its plans for electric driving. Both stocks shot up on Wednesday. In the meantime, Tesla has exchanged the loss for a 2.7 percent profit.
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Texas
NRG Energy makes a deep dive
: the stock loses 16.7 percent. The American electricity company withdrew its previous forecast of an annual profit to $ 2.6 billion.
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As a result of the brutal cold snap that hit Texas in February and led to massive power outages, NRG now expects a loss of $ 750 million. The problems shot the electricity price up to $ 9,000 per MWh and power companies had to stock up on the spot market to meet their obligations. A typical US electricity price is between $ 50 and $ 200 per MWh.
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