Weekly Market Recap Week Ended June 23

U.K. tightening

As the United States and some other major economies assess whether to slow down or pause their inflation-fighting policies, the United Kingdom’s central bank went in a different direction, lifting its key benchmark interest rate by half of a percentage point. Thursday’s steep increase raised the rate from 4.5% to 5.0%, the highest level since 2008.

Inflation’s persistence

In testimony before Congress, U.S. Federal Reserve Chair Jerome Powell said there’s still “a long way to go” in the Fed’s campaign to reduce inflation, and further interest-rate increases are likely to be needed in coming months. After keeping rates unchanged at its last meeting, the Fed will consider whether to resume rate hikes at its July 25–26 session.

Price check ahead

A report scheduled to be released on Friday will show whether a recent slight monthly rise in U.S. inflation extended into May, as measured by the U.S. Federal Reserve’s preferred gauge for tracking prices. The most recent report showed that the Personal Consumption Expenditures Price Index rose at a 4.4% annual rate in April, up from 4.2% in March—a reversal of the downward trend in the prior months.

Volatility on holiday

An index that measures investors’ expectations of short-term U.S. stock market volatility slipped, extending its recent decline to the lowest level since January 2020. On Friday, the Cboe Volatility Index closed at 13.4—just above its level before the start of the COVID-19 pandemic and down 33% from a recent high on May 24.