The Russian invasion of Ukraine has begun, constituting the most serious security crisis in Europe for decades. Markets are responding with equities selling off, bonds rallying, gold and the US Dollar rising, oil/energy prices surging sharply, and the Russian markets being the most affected.
Geopolitical risk and economic and policy uncertainty today have the world on edge. How do central banks assess geopolitical unrest and its effects on the domestic economy? In the world’s largest economy, the US Federal Reserve will hold its regularly scheduled meeting on March 16–17.
The anticipated actions of the Federal Open Market Committee (FOMC) is that it will raise interest rates to weaken inflation. But in light of current events, the chances of it raising rates by 50bp at that meeting, which seemed likely only several weeks ago, have all but vanished.