Despite unusual pressure from both politicians and the markets, the US Federal Reserve (Fed) raised its benchmark interest rate by a quarter of a percentage point last week. At the same time, the central bank lowered its outlook for future hikes.

As the financial markets had expected, the Fed raised the target range for its benchmark funds rate to 2.25 per cent to 2.5 per cent. The move was the fourth increase this year and the ninth since it began normalising rates three years ago.

Last week’s rise came despite President Donald Trump’s tweets against rate hikes. In a statement, the Fed said that more rate hikes could be in the pipeline, though it did adopt a more dovish tone.

Meanwhile, Germany is bidding farewell to a turbulent year with a fourth straight monthly decline in its business confidence, amid mounting worries among leaders of its corporate sector that the eurozone’s largest economy is heading for a slowdown.

The Ifo Institute’s gauge of corporate confidence in Germany fell to 101.0 in December from 102.0 in November, reaching its lowest level in more than two years and below the 101.8 expected by economists.

The report suggests that Germany may have to overcome bigger obstacles than new emissions-testing rules, which hit its important vehicle industry in the third quarter of this year and led to a contraction in output. Finally, in the UK, inflation fell from 2.4 per cent to 2.3 per cent in November, meeting economists’ expectations, according to latest figures from the Office for National Statistics (ONS). The move lower was driven largely by lower energy costs. Brent crude oil has fallen to $56 per barrel in recent weeks, down from over $85 per barrel last October.

Apart from energy prices, the largest downward contributors to consumer prices in November were a variety of recreational and cultural goods and services. Upward contributions came “almost entirely” from tobacco, the ONS said.

This report was compiled by Bank of Valletta for general information purposes only.