US Federal Reserve (Fed) policymakers expressed greater concern about the spike in US inflation at their meeting earlier this month and raised the possibility of ending bond purchases sooner than they planned if high prices persisted.

Most officials at the central bank’s rate-setting committee still expect price rises to slow next year, minutes of the Fed’s November 2-3 meeting showed, but they also acknowledged that “inflation pressures could take longer to subside” than they previously believed due to ongoing labour and supply shortages.

These shortages have pushed the yearly rate of inflation to a 31-year high of 6.2 per cent from almost zero just a little over a year ago. At the meeting, Fed officials approved a plan to gradually taper asset purchases of $120 billion a month and wind down the bond-buying programme by next June.

In the meantime, the eurozone economy still showed decent growth at the start of the fourth quarter despite growing economic headwinds, survey data from IHS Markit showed on Tuesday. More importantly, price pressures continued to mount, according to the survey, adding to the view that the

The mood among German businesses continued to worsen before the escalation of the fourth wave of the pandemic- Bank of Valletta

European Central Bank is set to move towards starting tapering. The composite Purchasing Managers’ Index (PMI) rose to 55.8 in November from 54.2 in October. The reading was expected to fall to 53.2. The better-than-expected PMI shows that the eurozone economy has continued on its path of quick recovery at the beginning of the fourth quarter in spite of rising COVID-19 cases.

Finally, Germany’s closely watched leading indicator, the Ifo index, dropped for the fifth consecutive month in November, coming in at 96.5 from 97.7 in October. The gauge of business sentiment was forecast to drop to 96.6. The index now stands at its lowest level since February this year. Both the current assessment and the expectations component weakened.

The survey results show that the mood among German businesses continued to worsen before the escalation of the fourth wave of the pandemic, which could now actually push the economy to the brink of stagnation, or even a technical recession. Over the last few days, Germany introduced stricter measures to curb the spread of the pandemic.

This article has been prepared by Bank of Valletta plc for general information purposes only.