The eurozone economy was stagnant in the last three months of 2022, European statistics agency Eurostat said on Tuesday. Gross domestic product failed to register any sequential growth after expanding by 0.4 per cent in the third quarter.

The fourth quarter figure was revised down to zero per cent from a February 14 estimate of 0.1 per cent growth. Year-on-year, the economic growth rate slowed to 1.8 per cent from 2.4 per cent in the third quarter. Gross domestic product expanded by 3.5 per cent for the whole year of 2022, after registering a growth rate of 5.3 per cent in 2021.

Sentiment about the eurozone economy has been more upbeat recently as many bad economic scenarios, such as high energy costs, have not played out. However, as more data comes in, it is clear that the eurozone economy is struggling, especially in the first quarter of 2023.

Meanwhile in the US, in his testimony to the US Congress on Tuesday, Federal Reserve (Fed) chair Jerome Powell said interest rates may rise to higher levels than the Fed has been anticipating so far.

The Fed will probably need to raise interest rates to higher levels than previously expected in response to recent strong data, and is prepared to increase the pace of the hikes if the “totality” of incoming information suggests tougher measures are needed to control inflation, Fed Chair Jerome Powell said.

In their December estimate, Fed officials pegged the terminal rate at 5.1 per cent. Following Powell’s remarks, current market pricing moved higher to a range of 5.5 to 5.75 per cent. Powell did not elaborate on how high he thinks rates will ultimately go.

Finally, China’s February consumer prices remained contained, as the cost of food and commodities softened, casting doubt on China’s economic recovery after the scrapping of the COVID-19 restrictions.

Consumer prices, as measured by the Consumer Price Index (CPI), rose by one per cent in February on a year-on-year basis, slower than the 2.1 per cent increase recorded in January. The cooling inflation was caused primarily by a slowdown in food price increases, China’s National Bureau of Statistics said.

The result also missed the 1.7 per cent price increase forecast by economists by a wide margin and was the lowest reading since the 0.9 per cent gain recorded in February 2022. Analysts said that last month’s large fall in CPI inflation was broad-based, as both food and non-food inflation declined by 2.6 per cent and 0.6 per cent respectively.

This article does not constitute legal and/or financial advice and is being issued for information purposes only by Bank of Valletta plc, 58, Zachary Street, Valletta. Bank of Valletta is a public limited company regulated by the MFSA and is licensed to carry out the business of banking and investment services in terms of the Banking Act (Cap. 371 of the Laws of Malta) and the Investment Services Act (Cap. 370 of the Laws of Malta).