Monday’s statement by US Federal Reserve (Fed) officials over the risks of raising interest rates faster than necessary increased the risk appetite in US and global markets.

Expectations regarding the Fed’s monetary policy decisions in March continue to affect asset prices.

On Monday, San Francisco Fed President Mary Daly stated that the bank should start raising interest rates in March at the earliest and warned against tightening monetary policy faster than it should.

Esther George, president of the Kansas City Fed, known for her hawkish stance, also stated that the bank’s strong steps in reducing the balance sheet would provide the opportunity to be softer in interest rate hikes.

Richmond Fed President Thomas Barkin noted that the rate hikes will depend on the developments in the economy, especially inflation.

With these statements of the Fed officials, the possibility that the Fed may increase interest rates by 50 basis points in March, partially weakened.

While the statements of Fed officials increased the risk appetite of investors, it was seen that technology shares, which led to a downward trend in January, also led to the rise on Monday.

Russia-Ukraine tensions continue to increase oil prices globally, the price of Brent crude oil is over $9 per barrel.

On Monday, US indices closed January with gains, while Nasdaq jumped by 3.41%.

In the EU side, the union’s economy grew by 0.3% in the last quarter of 2021, below expectations.

Markets expect the European Central Bank will increase interest rates this year and the Bank of England will increase the rate by 125 basis points during 2022.

The EU commission put Russia-designed Nord Stream 2 gas pipeline on hold amid ongoing Russia-Ukraine tension.

On Monday, major European indices closed the day with gains excluding the UK.

Asian indices closed Monday looking up while Chinese, South Korean and Hong Kong markets were closed for a week on account of the Chinese New Year, also known as Spring Festival or Lunar New Year.

On Tuesday, Australian Central Bank kept the policy rate at 0.10% and announced that it will stop the asset purchases as of Feb. 10.

The unemployment decreased to 2.7% in Japan, according to official figures on Monday.

Turkiye’s BIST 100 index also closed January with a 1.01% increase to over 2,000 points.

*Writing by Gokhan Ergocun

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