Signs that inflation is cooling in the US and Europe fueled hopes that central banks would stop rate hikes, but that was before the release of the Fed’s minutes from its latest policy meeting. They showed officials believe higher interest rates need to stay a while longer to curb inflation.  They don’t even see any rate cuts in 2023.

Despite this the FTSE 100 was up 0.3% this morning, boosted by the news that clothing retailer Next raised its pretax profit guidance for fiscal 2023. Greggs also said today that it expects full-year sales to rise 23%.

In addition, the service PMI for December shows expansion in the services sector picked up last months after four consecutive months of slowing growth. The service PMI rose to 52.7 from 50.8 in November.

 

Things to read today:

No Fed Cut? Markets Think its More Than a Matter of Minutes (Bloomberg)

Fed wants ‘more evidence’ of easing inflation and backs fresh rate rises (FT)

Why Xi Jinping Reversed His Zero-Covid Policy in China (WSJ)