Asian stock markets followed Wall Street higher on Tuesday ahead of a Federal Reserve decision on another possible interest rate hike amid worries about global banks. Shanghai, Hong Kong and Seoul advanced. Japanese markets were closed for a holiday. Oil prices declined. Wall Street's benchmark S&P 500 index rose 0.9% on Monday after U.S., European and Japanese central banks announced measures to ease strains on the financial system, including lending more dollars if necessary. The collapse of two U.S. banks and the takeover of troubled Credit Suisse have heightened fears other lenders might crack under the strain of repeated rate hikes to cool economic activity and inflation that is near multi-decade highs. Traders expect the Fed to go ahead with another rate hike Wednesday but think it might be held to 0.25 percentage points, down from the 0.5 points previously expected. “Can the Federal Reserve really continue to hike rates in the face of a banking crisis?" Clifford Bennett of ACY Securities said in a report. “There are ongoing stresses in the banking system that will only grow with further rate hikes.” The Shanghai Composite Index gained 0.4% to 3,246.88 and the Hang Seng in Hong Kong advanced 0.9% to 19,175.92. The Kospi in Seoul rose 0.4% to 2,387.52 and Sydney's S&P-ASX 200 surged 0.8% to 6,955.40. New Zealand declined while Southeast Asian markets rose. On Wall Street, the S&P 500 rose to 3,951.57. The Dow Jones Industrial Average gained 1.2% to 32,244.58. The Nasdaq composite added 0.4% to 11,675.54. Swiss regulators arranged Sunday for UBS to acquire rival Credit Suisse for almost $3.25 billion. Credit Suisse has been battling a unique set of problems for years, but they came to a head last week as its stock price tumbled to a record low. Attention in the United States has focused on smaller and mid-sized banks. The surge in the Fed's benchmark lending rate to a range of 4.5% to 4.75%, up from close to zero at the start of last year, caused prices of bonds and other assets on banks' books to fall, raising concern about their financial health. First Republic Bank has been at the center of investors’ crosshairs in the hunt for the industry’s next victim. Its shares fell 47.1% after S&P Global Ratings cut its credit rating for the second time in a week. S&P said it could lower the rating even further despite a group of the biggest U.S. banks announcing last week they would deposit $30 billion in a sign of faith in First Republic. New York Community Bancorp jumped 31.7% after it agreed to buy much of Signature Bank in a $2.7 billion deal. Signature Bank became the industry’s third-largest failure earlier this month. In energy markets, benchmark U.S. crude lost 56 cents to $67.26 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 90 cents on Monday to $67.64. Brent crude, the price basis for international oil trading, declined 59 cents to $73.20 per barrel in London. It gained 82 cents the previous session to $73.79. The dollar rose to 131.39 yen from Monday's 131.32 yen. The euro declined to $1.0713 from $1.0724.

The U.S. inflation report for December being released Thursday morning could provide another welcome sign that the worst bout of spiking prices in four decades is slowly weakening. Or it could suggest that inflation remains persistent enough to require tougher action by the Federal Reserve. Most economists foresee the more optimistic scenario: They think December marked another month in which inflation, though still uncomfortably high, continued to cool. According to a survey by the data provider FactSet, analysts have predicted that consumer prices rose 6.5% in December compared with a year earlier. That would be down from 7.1% in November and well below a 40-year high of 9.1% in June. On a month-to-month basis, the economists think prices were flat in December. Even more significant, a closely watched gauge of “core” prices — which excludes volatile energy and food costs — is expected to have risen just 0.3% from November to December and 5.7% from a year earlier. The Fed closely tracks core prices, which it sees as a more accurate indicator of future inflation, in setting its interest rate policies. Another modest rise in core prices would increase the likelihood that the Fed would raise its benchmark rate by just a quarter-point, rather than a half-point, when its next meeting ends Feb. 1. For now, inflation is falling, with the national average price of a gallon of gas declining from a $5 a gallon peak in June to $3.27 a gallon as of Wednesday, according to AAA. Supply chain snarls that previously inflated the cost of goods have largely unraveled. Consumers have also shifted much of their spending away from physical goods and instead toward services, such as travel and entertainment. As a result, the cost of goods, including used cars, furniture and clothing, has dropped for two straight months. Economists will pay particular attention Thursday to the prices of services, which are seen as a stickier component of inflation. They reflect rising wages among labor-intensive businesses such as restaurants, hotels and health care companies. If the data show only a small increase in services costs, that would likely strengthen hopes that the economy can avoid recession and instead experience a “soft landing." Such a scenario would mean slow growth and likely a small rise in unemployment but much less economic pain than a full-fledged recession. Read more: Europe's inflation slows again but cost of living still high Indeed, last week's jobs report bolstered the possibility that recession could be avoided. Even after the Fed's seven rate hikes last year and with inflation still high, employers added a solid 223,000 jobs in December, and the unemployment rate fell to 3.5%, matching the lowest level in 53 years. At the same time, average hourly pay growth slowed, which should lessen pressure on companies to raise prices to cover their higher labor costs. “The soft landing narrative has gained some credibility this year, and that has also led to a stock market rally," said Michael Arone, chief investment strategist at State Street Global Advisors. Another positive sign for the Fed's efforts to quell inflation is that Americans overall expect price increases to decline over the next few years. That is important because so-called “inflation expectations” can be self-fulfilling: If people expect prices to keep rising sharply, they will typically take steps, like demanding higher pay, that can perpetuate high inflation. On Monday, the Federal Reserve Bank of New York said that consumers now anticipate inflation of 5% over the next year. That's the lowest such expectation in nearly 18 months. Over the next five years, consumers expect inflation to average 2.4%, only barely above the Fed's 2% target. Still, in their remarks in recent weeks, Fed officials have underscored their intent to raise their benchmark short-term rate by an additional three-quarters of a point in the coming months to just above 5%. Such increases would come on top of seven hikes last year, which caused mortgage rates to nearly double and made auto loans and business borrowing more expensive. Futures prices show that investors expect the central bank to be less aggressive, and implement just two quarter-point hikes by March, leaving the Fed's rate just below 5%. Investors also project the Fed will cut rates in November and December, according to the CME FedWatch Tool. Fed Chair Jerome Powell has sought to push back against that expectation of fewer hikes this spring and cuts by the end of the year, which can make the Fed's job harder if investors bid up stock prices and lower bond yields. Both trends can support faster economic growth just when the Fed is trying to cool it down. The minutes from the Fed's December meeting noted that none of the 19 policymakers foresee rate cuts this year. Read more: Wall Street braces for earnings to get hit by inflation Still, last week James Bullard, president of the Federal Reserve Bank of St. Louis, expressed some optimism that this year, “actual inflation will likely follow inflation expectations to a lower level," suggesting 2023 could be a “year of disinflation.”

The Federal Reserve on Wednesday raised its benchmark interest rate by a hefty three-quarters of a point for a second straight time in its most aggressive drive in more than three decades to tame high inflation. The Fed’s move will raise its key rate, which affects many consumer and business loans, to a range of 2.25% to 2.5%, its highest level since 2018. Speaking at a news conference after the Fed’s latest policy meeting, Chair Jerome Powell offered mixed signals about the central bank’s likely next moves. He stressed that the Fed remains committed to defeating chronically high inflation, while holding out the possibility that it may soon downshift to smaller rate hikes. And even as worries grow that the Fed’s efforts could eventually cause a recession, Powell passed up several opportunities to say the central bank would slow its hikes if a recession occurred while inflation was still high. Roberto Perli, an economist at Piper Sandler, an investment bank, said the Fed chair emphasized that “even if it caused a recession, bringing down inflation is important.” But Powell’s suggestion that rate hikes could slow now that its key rate is roughly at a level that is believed to neither support nor restrict growth helped ignite a powerful rally on Wall Street, with the S&P 500 stock market index surging 2.6%. The prospect of lower interest rates generally fuel stock market gains. At the same time, Powell was careful during his news conference not to rule out another three-quarter-point hike when the Fed’s policymakers next meet in September. He said that rate decision will depend upon what emerges from the many economic reports that will be released between now and then. “I do not think the U.S. is currently in a recession,” Powell said at his news conference in which he suggested that the Fed’s rate hikes have already had some success in slowing the economy and possibly easing inflationary pressures. The central bank’s decision follows a jump in inflation to 9.1%, the fastest annual rate in 41 years, and reflects its strenuous efforts to slow price gains across the economy. By raising borrowing rates, the Fed makes it costlier to take out a mortgage or an auto or business loan. Consumers and businesses then presumably borrow and spend less, cooling the economy and slowing inflation. The surge in inflation and fear of a recession have eroded consumer confidence and stirred public anxiety about the economy, which is sending frustratingly mixed signals. And with the November midterm elections nearing, Americans’ discontent has diminished President Joe Biden’s public approval ratings and increased the likelihood that the Democrats will lose control of the House and Senate. The Fed’s moves to sharply tighten credit have torpedoed the housing market, which is especially sensitive to interest rate changes. The average rate on a 30-year fixed mortgage has roughly doubled in the past year, to 5.5%, and home sales have tumbled. Consumers are showing signs of cutting spending in the face of high prices. And business surveys suggest that sales are slowing. The central bank is betting that it can slow growth just enough to tame inflation yet not so much as to trigger a recession — a risk that many analysts fear may end badly. At his news conference, Powell suggested that with the economy slowing, demand for workers easing modestly and wage growth possibly peaking, the economy is evolving in a way that should help reduce inflation. “Are we seeing the slowdown in economic activity that we think we need?” he asked. “There’s some evidence that we are.” The Fed chair also pointed to measures that suggest that investors expect inflation to fall back to the central bank’s 2% target over time as a sign of confidence in its policies. Powell also stood by a forecast Fed officials made last month that their benchmark rate will reach a range of 3.25% to 3.5 % by year’s end and roughly a half-percentage point more in 2023. That forecast, if it holds, would mean a slowdown in the Fed’s hikes. The central bank would reach its year-end target if it were to raise its key rate by a half-point when it meets in September and by a quarter-point at each of its meetings in November and December. With the Fed having now imposed two straight substantial rate hikes, “I do think they’re going to tiptoe from here,” said Thomas Garretson, senior portfolio strategist at RBC Wealth Management. On Thursday, when the government estimates the gross domestic product for the April-June period, some economists think it may show that the economy shrank for a second straight quarter. That would meet one longstanding assumption for when a recession has begun. But economists say that wouldn’t necessarily mean a recession had started. During those same six months when the overall economy might have contracted, employers added 2.7 million jobs — more than in most entire years before the pandemic. Wages are also rising at a healthy pace, with many employers still struggling to attract and retain enough workers. Still, slowing growth puts the Fed’s policymakers in a high-risk quandary: How high should they raise borrowing rates if the economy is decelerating? Weaker growth, if it causes layoffs and raises unemployment, often reduces inflation on its own. That dilemma could become an even more consequential one for the Fed next year, when the economy may be in worse shape and inflation will likely still exceed the central bank’s 2% target. “How much recession risk are you willing to bear to get (inflation) back to 2%, quickly, versus over the course of several years?” asked Nathan Sheets, a former Fed economist who is global chief economist at Citi. “Those are the kinds of issues they’re going to have to wrestle with.” Also read: Bangladesh inflation lower than many countries in the world: Info Minister Economists at Bank of America foresee a “mild” recession later this year. Goldman Sachs analysts estimate a 50-50 likelihood of a recession within two years.

Major global stock markets were mostly lower Thursday after notes from the Federal Reserve’s latest meeting confirmed expectations of more interest rate hikes but held no surprises to rattle investors. London, Tokyo, Hong Kong and Sydney declined. Frankfurt and Shanghai gained. Oil prices rose. Investors are uneasy over the impact of interest rate hikes in the United States and other Western economies to cool surging inflation. Wednesday’s Fed release showed board members support 0.5-percentage-point hikes at their next two meetings. That will weigh on economic activity but already was factored into stock prices. There were no “hawkish or dovish surprises” or mentions of a bigger increase, Anderson Alves of ActivTrades said in a report. In early trading, the FTSE 100 in London lost 0.1% to 7,516.42 while Frankfurt’s DAX gained 0.4% to 14,057.88. The CAC in Paris advanced 0.3% to 6,320.42. On Wall Street, the future for the benchmark S&P 500 index was off 0.1% and that for the Dow Jones Industrial Average was little-changed. Also Read: Asian stock markets higher after Wall St sinks further On Wednesday, the S&P 500 index rose 0.9% after from this month’s Fed meeting showed board members agreed half-point rate hikes “would likely be appropriate.” That would be double the usual margin of increases. In Asia, the Shanghai Composite Index gained 0.5% to 3,123.11 while the Nikkei 225 in Tokyo lost 0.3% to 26,604.84. The Hang Seng in Hong Kong sank 0.3% to 20,116.20. The Kospi in Seoul declined 0.2% to 2,612.45 after the South Korean central bank raised its benchmark interest rate by 0.25 percentage points to 1.75%. “With price pressures set to remain elevated in the near term, we expect the Bank to continue hiking in quick succession over the coming months,” Alex Holmes of Capital Economics said in a report. Sydney’s S&P-ASX 200 ended 0.7% lower at 7,105.90. India’s Sensex gained 0.8% to 54,173.63. New Zealand declined while Southeast Asian markets rose. Investors also are worried about the impact of Russia’s February invasion of Ukraine and an unexpectedly sharp Chinese economic slowdown. They hope the Fed can cool inflation that is running at a four-decade high without tipping the biggest global economy into recession. The Fed raised its key interest rate by 0.5 percentage points at its May meeting in its most aggressive move in two decades. It indicated more hikes were to come. The S&P 500 is coming off of a seven-week series of declines that came close to ending the bull market for stocks that began in March 2020. In energy markets, benchmark U.S. crude 70 cents to $111.03 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the price basis for international oils, gained 43 cents to $111.55 per barrel in London.    

President Donald Trump said Thursday that he  intends to nominate two people to serve on the Federal Reserve's Board of Governors, an institution he has repeatedly attacked for not cutting rates deeply enough.