Federal Reserve Interest Rate Hikes in Investors' Crosshairs

Against a backdrop of soaring fuel prices, overall inflation, and Russia's bloody invasion of the Ukraine, the Federal Reserve meets to discuss monetary policy—which includes raising interest rates for the first time since 2018.

The Fed is widely expected to boost rates at the two-day Federal Open Market Committee (FOMC) meeting that begins on Tuesday, and although Fed Chair Jerome Powell previously stated he would support a quarter-percentage-point rate hike, he said the central bank would closely monitor the impacts of developments in Ukraine. Investors can also expect producer inflation figures, retail sales data, and key updates on the U.S. housing market.  

The FOMC’s highly-anticipated policy meeting includes a press conference scheduled for Wednesday. In remarks earlier this month, Powell took the unusual step of saying ahead of the meeting that he would support a 25-basis-point rate hike to combat inflation.

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However, expanding sanctions and other economic penalties against Russia will likely raise price pressures, and central bankers will be forced to weigh the risks of rising inflation with the possibility of a sharp economic downturn if rates are raised too quickly.

DiDi Decline

Shares of DiDi Global Inc. (DIDI) opened lower after tumbling 44% Friday on a report the company suspended preparations for listing its shares in Hong Kong. 

Shares have fallen almost 60% so far this year, and 87% since the company's initial public offering (IPO) in June. The drop in value to about $2 a share means DiDi’s two top shareholders, SoftBank and Uber Technologies Inc. (UBER), face the potential for steep losses. DiDi went public at the end of June, raising $4.4 billion in one of the biggest IPOs of the year. SoftBank owns about 20% of DiDi, worth about $1.8 billion, down from $14 billion at the time of the IPO. Uber owns roughly 12%, worth just over $1 billion.  

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DiDi and its bankers reportedly suspended working on its Hong Kong stock listing after failing to fulfill Chinese regulators demands that it overhaul its systems to prevent security and data leaks. The listing was slated to take place during the summer of this year. 

DiDi had said in December that it was planning to delist its shares in New York, just months after going public. Soon after the DiDi IPO, Chinese authorities announced they had launched an investigation into the company for allegedly violating the country’s data privacy and national security laws.