Federal Reserve (Fed) officials signalled they could raise interest rates by a half percentage point at their meeting early next month and begin reducing their $9 trillion asset portfolio as part of their most aggressive effort to curb inflation in more than two decades.

Minutes from the Fed’s March 15-16 meeting, released on Wednesday, showed that many officials were prepared to raise interest rates by a half percentage point but opted for a smaller, quarter-point increase because of concern over the fallout from the Russia-Ukraine conflict. The minutes, though, pointed to potential rate hikes of 50 basis points at upcoming meetings.

Meanwhile, eurozone investor morale fell to the lowest point since July 2020 with the current conditions index falling from 7.8 in March to -5.5 in April, the lowest level in a year, the behavioural research institute Sentix said. At the same time, the expectations measure dived from -20.8 in March to -29.8 in April, the lowest reading since December 2011.

Recession fears are the main cause of falling investor confidence, as the Russian invasion of Ukraine and the related sanctions are magnifying the underlying weakness in the eurozone economy.

“Investors do not expect that the European Central Bank will rush to the rescue with a more relaxed, more expansive monetary policy because of the still considerable pace of inflation growth,” Sentix notes.

Finally, China’s services sector posted its steepest decline since the start of the pandemic as the local surge in coronavirus cases restricted mobility and weighed on client demand, a private sector survey showed on Wednesday.

The Caixin services purchasing managers’ index (PMI) plummeted to 42 in March from 50.2 in February, dropping below the 50 level that separates growth from contraction on a monthly basis. The Caixin survey, which focuses more on small firms in coastal regions, tallied with the gauge of an official survey, which also showed a deterioration in the services sector.

The report also highlighted a stronger rise in input costs faced by services companies. The rate of inflation was solid overall and quicker than average.

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