Shock GDP Slide Fuels UK Slowdown Corncern, Investors Eye U.S Fed Rate Decision

New figures out on June 13 showed the UK’s economy unexpectedly shrank in April. GDP contracted by 0.3%, when economists had expected it to eke out growth.

The UK Office for National Statistics said that might have been the case, but for reduced government spending on health crisis measures. Rising prices are the big worry now, and not just for shoppers. Many firms said increases in the cost of production had affected their business. Meanwhile, soaring energy costs and a recent tax increase are squeezing spending power for families.

Finance minister Rishi Sunak says the UK isn’t alone in facing such problems. He’s already unveiled more support for households, and is expected to announce further measures later in the year. However, the outlook for growth looks grim.

Investors eye US Fed’s big rate decision

Meanwhile, Everyday Americans are feeling the wallop on their wallets from unchecked inflation. From gas prices to food prices, the country is experiencing unprecedented levels of economic woes.

Federal Reserve policymakers on Wednesday are expected to deliver the biggest U.S. interest-rate hike in decades, along with forecasts for more hefty rate hikes this year, their best guesses for how quickly inflation could subside, and at what cost to jobs.

Fed watchers expect a rate hike of 0.75 percentage point, the first such increase since 1994. This would lift the Fed’s short-term target policy rate to a range of 1.5% and 1.75%.

An announcement is due at 2 p.m. EDT (1800 GMT) following the end of the central bank’s two-day meeting.

The Fed will also release updated projections for economic growth, inflation, unemployment and interest rates for the next several years from all 18 central bankers. A summary is expected to show rates rising past 3% by year end but perhaps only moderate cooling in price pressures.