Global update: Concerns over Ukraine persist

Alongside the heavy human cost of Russia’s war in Ukraine, the Organisation for Economic Development (OECD) issued a warning about the economic impact. The crisis is set to drive up the rate of global inflation by around 2.5%, with high prices for oil, gas and wheat likely to persist.


  • The Fed raised US interest rates by 25 basis points
  • Eurozone CPI rose to 5.9% YoY in February
  • Rising Covid infection rates triggered a lockdown in Shanghai

Question-marks over global growth: alongside the heavy human cost of Russia’s war in Ukraine, the Organisation for Economic Development (OECD) issued a warning about the economic impact. The crisis is set to drive up the rate of global inflation by around 2.5%, with high prices for oil, gas and wheat likely to persist. Many large US and European companies have halted business in Russia in protest of Russia’s invasion. Meanwhile, the International Monetary Fund (IMF) highlighted the impact of sanctions on the global economy and financial markets, and warned that the crisis is “creating an adverse shock to both inflation and activity” in many countries.

“The crisis is ‘creating an adverse shock to both inflation and activity’ in many countries” (IMF)

Fed tightens for first time since 2018: the US experienced its first increase in interest rates since March 2018 as the Federal Reserve (Fed) raised its key rate by 25 basis points to a range of 0.25% to 0.50%. Policymakers also signalled the likelihood of further tightening during 2022, with the federal funds rate expected to reach almost 2% by the end of the year. The annualised rate of consumer price inflation in the US reached its highest level since July 1981 during February, rising from 7.5% to 7.9%. Uncertainties over the economic outlook were further compounded at the end of the month by an inversion in the US Treasury yield curve. The Dow Jones Industrial Average Index ended the month 2.3% higher.

Risks to the downside in Europe: President of the European Central Bank (ECB) Christine Lagarde warned that Russia’s invasion of Ukraine had increased the risks to the economic outlook, and warned that the crisis will have “a material impact on economic activity and inflation through higher energy prices and commodity prices, the disruption of international commerce and weaker confidence”. The eurozone’s rate of inflation surged from 5.1% in January to 5.9% in February, reflecting the continuing rise in energy prices. The Dax Index fell by 0.3% over March.

Covid resurgence in China: share prices fell heavily in China towards the end of March as a fresh wave of Covid-19 infections led to a lockdown in Shanghai. The Shanghai Composite Index dropped by 6.1% over March. Elsewhere, Japan’s economy expanded at a revised annualised rate of 4.6% in the final three months of 2021, compared with an earlier estimate of 5.4%. The Nikkei 225 Index rose by 4.9% in March.