Page - 3 - of 13  Fed communication points to further large rate hikes this year. The market now expects the Fed funds rate to peak around 3.4% early in 2023. The pace of monetary policy normalisation is much faster than was expected last year. Inflation dynamics have been somewhat different in the European Union (EU).
Inflation in the EU has been largely supply-driven. The war in Ukraine and the resulting economic sanctions on Russia have led to an energy crisis in Europe, where gas prices have soared more than 400%.