The Day at a Glance | December 14 2022

*Monetary policy decision in the Federal Reserve.

*Inflation in the United Kingdom became more moderate after logging its highest level in 41 years; it decreased to 10.7% annual in November.

*Industrial production in Europe decreased in November (-2% m/m; 3.4% annual).

*The impact on Russia`s oil embargo is yet to be seen, it could bring higher crude oil prices in 2023; demand is expected to be stable next year: IEA.

*US plans to reinforce Ukrainian aerial defenses.

Economic environment

Monetary policy. The United States Federal Reserve will make a monetary policy decision this afternoon; it`s expected to increase interest rates more moderately with respect to previous meetings and update its macroeconomic forecasts. Markets will pay special attention to the central bank`s expected interest rates path (dotplot) for 2023. Markets are currently expecting interest rates to ultimately reach 5% after a 50bp increase would take the federal funds rate to 4.5% this afternoon; after this, two additional 25bp increases would be carried out in February and March. The central bank`s members have reiterated their plans to increase the 4.6% rate expectations forecasted in September. A considerable upwards adjustment could imply that the FED still has road ahead regarding the restrictive cycle; while a moderate adjustment could suggest that it`s close to reaching the end of its cycle. Additionally, Chair of the FED, Jerome Powell, will hold a press conference in which he will likely emphasize the central bank`s mission to stop inflation even despite a slowdown in the increasing rates cycle. Powell is also expected to give signs regarding when and under which circumstances the FED could pause the increasing rates cycle. The press release will be made public at 1:00pm Mexico City time; and the press conference will be held half an hour after the decision is made known.