Fed Officials Voice Concerns over Sticky Inflation Suggesting Higher Rate Increases for Longer

Fed officials have stressed the need for further rate hikes to curb inflation, but expressed mixed views on how close they are to a halt after new data showed signs of persistent price pressures. Several officials said yesterday that interest rates may actually require to rise higher than expected to ensure that inflation continues to slow. Richmond Fed President Thomas Barkin said, "If inflation continues to run well above our objective, we may need to do more," while Philadelphia Fed President Patrick Harker said he thought policymakers. Interest rates need to be raised above 5% and possibly higher to offset inflation.

Earningswise, Airbnb (ABNB) reported stellar Q4 results that took investors by surprise. The travel and lodging company’s Q4 GAAP EPS of $0.48 beat by $0.21. Revenue of $1.9B (+24.2% YoY) beat by $40M. Gross booking value of $13.5B posted a +20% increase YoY). Nights and experiences booked 88.2 million (also +20% YoY).

European stocks are poised for losses as traders mull mixed central bank commentaries. Published data included UK (read below) and Spain CPI inflation, Norway GDP and UK house prices. Earnings deluge continuesd as companies including Barclays, Glencore and Heineken delivered results. Meanwhile, main European stock are trading mixed. Before the bell, the UK released its latest inflation data, showing consumer prices rose less than expected in January, and companies including Kering and Barclays posted their latest results.

The German DAX gained 0.57% at the time of writing, with Brenntag (BRN.DE), up 2.52%, as the best performer. The British FTSE 100 was up 0.15% at the time of writing. NatWest (NWG.L), down 2.30%, led the losses. The French CAC 40 advanced by 1.01% concurrently with Kering (KER.PA) moving higher 1.83% despite posting disappointing Q4 results. The pan-European Euro Stoxx 600 added 0.15% at 3:15 p.m. CET.

Eurostat revealed earlier this afternoon, the seasonally adjusted industrial production in the Eurozone declined 1.1% in December 2022 MoM. The entire European Union saw a monthly decline of 0.4%. On an annual basis, industrial output fell 1.7% in the euro area and 0.4% in the EU. Also, the trade deficit in the euro area stood at €8.8 billion in December, unchanged on an annual basis. In the European Union, the trade deficit was €12.1 billion.

Markets in Asia-Pacific fell earlier this morning as investors digested the latest consumer prices report from the U.S., which showed inflation in January was higher than economists had expected.

Japan's Nikkei 225 slid 0.37% at the end of the session, while Hong Kong's Hang Seng plunged 1.54% at 6:58 am CET. In mainland China, the Shanghai Composite declined 0.41% and the Shenzhen Composite was down 0.09%. South Korea's Kospi plummeted 1.59% simultaneously and Australia's S&P/ASX 200 closed 1.06% lower.