Market Information Thursday 17 March 2022

The Federal Reserve has raised interest rates for the first time since 2018. The Fed is raising interest rates to a range of 0.25% to 0.50%. Policymakers expect to raise interest rates six more times this year, so that the policy rate will stand at around 2% by the end of 2022. In addition to the rate hikes, the Fed will also reduce its balance sheet which has increased substantially as a result of the bond purchase programme during the corona pandemic.

If the war in Ukraine, in addition to higher energy prices, also leads to a decrease in world trade and a lower willingness to invest, the Dutch economy could end up in a ‘short-term recession’ this year. This is what the CPB Netherlands reported on Wednesday. Inflation would then rise to almost 8%, which would reduce purchasing power by more than 5%. Excise tax cuts and compensation from the government have not been taken into account. In the gloomy scenario, the growth of world trade will be 2.5% this year, a considerable difference with the 6.6% in the basis estimate. Dutch exports take an even bigger hit: growth of 0.9% instead of 4.9%.

Unemployment in the Netherlands fell in February to its lowest level since 2003. Especially young people found work again, reported Statistics Netherlands (CBS) on Thursday. Last month there were 336,000 unemployed, or 3.4% of the labour force. In January the unemployment rate was still 3.6%. Over the past three months, the number of unemployed fell by an average of 8,000 a month. Last month the UWV benefits agency issued 187,600 unemployment benefits. This was 5,300 less than in January.

The 6M Euribor is unchanged at -0.41% compared to previous business day. The 10Y Swap increased with 3 basis points to 1.06% compared to previous business day.

In the attachment, today’s market data on money and capital market rates as well as other rates are presented.