- Hezbollah heir apparent Safieddine out of contact after strikes
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- Trump returns to site of failed assassination
- Careless Leverkusen held to Bundesliga draw
- O'Brien's 'superstar' Kyprios posts landmark win on Arc weekend
- Liverpool suffer Alisson injury blow
- Habosi helps Racing beat Vannes before Auradou's playing return
- Thousands march in London in support of Palestinians, 1 year after Oct 7
- Israel readying response to Iran missile attack
- Schutt, Mooney help Australia beat Sri Lanka in Women's T20 World Cup
- Liverpool extend Premier League lead with win at Palace
- Djokovic 'shakes rust off' to make third round of Shanghai Masters
- 'Imperfect' PSG fighting on all fronts - Luis Enrique
- Struggling Pakistan look to thwart adaptable England
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- Gauff fights back to set up Beijing final against Muchova
- Guardiola claims Premier League won't delay season for Man City
- Israel to mark October 7 attack as Gaza war spreads
- Gauff fights back to reach China Open final
- Recovering Stokes ruled out of first Pakistan Test
- Hezbollah battles troops on border as Israel pounds Lebanon
- Alcaraz, Sinner breeze into third round of Shanghai Masters
- Bagnaia wins Japan MotoGP sprint to cut Martin's lead
- Alcaraz breezes into third round of Shanghai Masters
- Gaza cultural heritage brought to light in Geneva
- 'Bullet for democracy': Trump returns to site of rally shooting
- Italy targets climate activists in 'anti-Gandhi' demo clampdown
- South Korean cult-horror series 'Hellbound' returns at BIFF
- Nepalis fear more floods as climate change melts glaciers
- Honduras arrests environmentalist's alleged murderer
- Padres pitcher Musgrove needs elbow surgery
- Supreme Court lets stand rules to curb mercury, methane emissions
- Boston beat Denver in NBA exhibition season opener, but Jokic says omens are good
- Chagos diaspora angry at lack of input on islands' fate
- Biden says 'not confident' of peaceful US election
- US trade chief defends tariff hikes when paired with investment
- Lukaku stars as Napoli beat Como to hold Serie A top spot
- Ohtani set for MLB playoff debut as Dodgers face Padres
- Pogba's drug ban cut to 18 months from four years
- Devine leads New Zealand to big win over India in Women's T20 World Cup
- Bosnia floods kill 16 people
- EU court blocks French ban on vegetable 'steak' labelling
- Prosecutors seek dismissal of rape charges against French rugby players
- Meta AI turns pictures into videos with sound
- Bolivia's Morales says claims he raped a minor are a 'lie'
- MLB Reds hire two-time champion Francona as manager
- Daniel Maldini receives first Italy call-up for Nations League
- US dockworkers return to ports after three-day strike
Markets on edge as Fed prepares renewed salvo against inflation
Wall Street has grown nervous as the Federal Reserve is set to make its biggest rate hike in more than two decades to crush inflation that has reached levels not seen since the 1980s.
The central bank's policy setting Federal Open Market Committee (FOMC) wraps up its two-day meeting on Wednesday and is expected to announce a half-percentage point rate hike, taking the key borrowing rate above 0.75 percent after sitting at zero from the start of the pandemic through 2021, even as inflation picked up speed.
The expected hike is part of what the Fed has billed as a tightening cycle likely to continue throughout this year and into 2023, with the goal of taking the steam out an inflation wave that has pushed consumer prices to the highest levels in four decades.
The US central bank hiked rates by a quarter percentage point in March, the first increase since 2018, but top officials including Fed Chair Jerome Powell have said officials will move quickly and front-load the increases.
While Wall Street sentiment has showed signs of improving this week, the central bank's hawkish posture played a role in the equity bloodletting seen in recent weeks.
April was the worst month for the S&P 500 since the pandemic, while the Nasdaq's tech stocks, which are particularly sensitive to higher interest rates, suffered their biggest loss since October 2008.
The Fed's goal is to engineer a "soft landing," reining in inflation but avoiding a contraction in economic activity.
But with China's pandemic lockdowns worsening global supply snarls and the war in Ukraine pushing commodity prices higher, analysts fear factors beyond the central bank's control could undermine that goal, and perhaps plunge the world's largest economy into a recession.
"We don't know if a recession will be realized; it will depend critically upon what the Fed does and how quickly the Ukrainian situation is resolved," Robert Eisenbeis of Cumberland Advisors said in a note.
He warned, "Near-term probabilities are not favorable and suggest caution."
- Many shocks -
Interest rate hikes are aimed at dampening demand, to take the steam out of consumer prices that jumped 8.5 percent over the 12 months to March, the biggest annual jump since December 1981, caused in part by consumers spending more for scarce goods.
Fed officials have signaled they view the economy as healthy enough to withstand higher rates, since unemployment has retreated almost to where it was before the pandemic, and recent data has shown strong consumer and business spending, even though the economy fell in the first quarter.
However, in addition to the external factors, central bankers cannot engineer a solution for the worker shortages that have challenged businesses and raised fears of a wage-price spiral, when employees demand higher salaries and fuel price increases.
Powell, who will speak following the FOMC meeting -- the announcement is scheduled for 1800 GMT -- and could provide more insight on the Fed's thinking.
The policy committee also is expected to provide details on the plans for shedding its massive holdings of bonds built up during the pandemic, a strategy to keep credit flowing through the economy.
That also could unsettle financial markets and act as a brake on activity.
Kathy Bostjancic of Oxford Economics said that for the moment, signals point to "relatively low but rising odds of a recession in the next 12 months" but she warned the chances will increase if the factors driving inflation worsen.
P.Sousa--PC