As the Russia-Ukraine conflict rages, hectic diplomacy is underway. U.S. and European Union leaders will meet and so will the NATO alliance, while all sides are courting China for support.
Ukrainian President Volodymyr Zelenskiy is lobbying foreign parliaments and NATO for a no-fly zone over his country. NATO remains wary of direct conflict with nuclear-armed Russia. It meets on Wednesday in what its chief Jens Stoltenberg calls “a defining moment for our security.” Generally, PMIs have held above the 50-mark that divides contraction from expansion. But after the ZEW index showed a record slump in German investor morale in March, a recession in Europe’s biggest economy cannot be ruled out.
Now, markets face a new set of worries. Chief among them: whether the Fed, which lifted rates on Wednesday for the first time since 2018,– will be able to fight soaring inflation without driving the economy into recession. With inflation above the 2% target and predictions of 3.6% GDP expansion in 2022, banks expect as many as four rate rises this year. The upcoming meeting will be the first one chaired by new governor Ida Wolden Bache.