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In our Market insights, Prosperity Investment Management examines the latest
developments across the globe's biggest financial markets - providing you with all the latest information you need to know.
Bank of England reports recession expected to be shorter and less severe
The UK is set to enter recession this year but it will be shorter and less severe than previously thought, according to the Bank of England.
The slump is now expected to last just over a year rather than almost two as energy bills fall and price rises slow.
As a result fewer people are likely to lose their jobs, but the economy remains fragile, warned the Bank.
The forecast comes as interest rates were raised to 4% from 3.5%, their highest level in over 14 years.
The Bank has been increasing interest rates in a bid to tackle the soaring cost of living as inflation remains close to its highest level for 40 years - more than five times the expected level.
Bank governor Andrew Bailey said inflation now appears to be falling, but warned there are still "big risks out there" which could continue to have an impact on the economy.
On Thursday, the Bank suggested interest rates may be nearing a peak, indicating it will only raise rates further if it sees signs that inflation will remain high. This partnered with higher interest rates are hoping to encourage people to save more and spend less, helping to stop prices rising as quickly.
Thursday's hike in borrowing costs is the tenth in a row and will add pressure to many households already struggling with the cost of living.
The impact will be felt by borrowers through higher mortgage and loan costs, although it should also mean better returns for savers.
US unemployment rate drops to the lowest level since 1969
Jobs growth surged in the US in January, defying fears that the economy is heading for an economic downturn.
Employers added 517,000 jobs last month, the Labor Department said. That was far more than expected, pushing the unemployment rate down to 3.4% - the lowest rate since 1969.
Many forecasters have warned that the odds of a recession this year are unusually high, pointing to data which has indicated a recent pullback in consumer spending, declines in manufacturing and a sharp slowdown in home sales.
A recent survey by research company Morning Consult suggested nearly half of the public thinks the economy has already fallen into recession, or a period of decline.
Despite this, the labour market has remained strong - though the gains in January shocked even those economists who have argued against the gloomy predictions.
The hiring in January was widespread, led by bars and restaurants, which are continuing to slowly recover from job losses sparked by the pandemic.
The car manufacturing and tech industries were among the few parts of the economy to report job losses. These sectors are sensitive to borrowing costs, which shot up last year, as the US central bank took further steps to stabilise consumer prices.
By raising interest rates, the Federal Reserve is aiming to cool demand, easing the pressures pushing up prices.
However, the increase in rates, coming at a time when price increases have started to ease, has raised fears that officials will tip the economy into a painful contraction, bringing economic activity to an abrupt slowdown that leads to firms cutting jobs.
Argentina struggles as inflation bites
A new 2,000-peso banknote will be issued in Argentina in response to soaring inflation and interest rates, as the country battles economic woes after the December bailout.
The new note - which will be worth $11 (£9) officially - comes after consumer prices jumped by nearly 95% in the 12 months to the end of December.
It marks Argentina's fastest pace of inflation since 1991.
The largest current bill, the 1,000-peso note, is worth just $2.70 on the alternative markets.
When Argentina's current currency was introduced in 1992, its value was pegged at one US dollar. But this fixed exchange rate system was abandoned after the financial crisis that engulfed the country in 2001 and 2002.
Argentina has seen prices rise sharply as the cost of commodities, including energy, have risen.
Soaring prices have largely been attributed to a bout of central bank money-printing, as well as the war in Ukraine.
In December, the International Monetary Fund (IMF) approved another $6bn (£4.9bn) of bailout money for South America's second largest economy. It was the latest payout for Argentina in a 30-month programme that is expected to reach a total of $44bn.
In September, it’s central bank also raised its main rate of interest to 75% as it attempted to rein in the soaring cost of living.
Earlier this week, Brazil and Argentina announced plans to create a common currency that would be used to boost trade between the two countries.
The country's leaders said they needed to find ways to finance commerce without relying on US dollars - although discussions are at an early stage.
