US Fed Ignores Inflation Risks as Global Economy Sees Continued Volatility

The global economy is facing new inflation risks as the hot war activity spreads, but the US Federal Reserve has chosen to ignore this threat and keep interest rates unchanged.

Last week saw a sharp decline in US mortgage applications, with a 10% fall in refinance activity driven by rising benchmark mortgage interest rates. This trend has been ongoing for months, with oil stocks falling sharply as well.

The Fed's decision to hold interest rates steady despite high inflation and supply shocks was a split one, with three members voting to hike rates by 25 basis points. The statement was notable for its brevity and lack of transparency, echoing the style of former Chairman Warsh.

In other regions, Singapore reported a producer price increase of over 30% in June from last year, while South Korea's stock market experienced a sharp decline due to concerns about tech valuations. In Australia, inflation came in lower than expected at 3.8%, but experts warn that this may not deter the Reserve Bank from raising interest rates.