European markets fall after hawkish comments from Fed; Stoxx 600 down 1.6%

ECB hikes rates, forecasts significant hikes ahead as it announces plan to shrink its balance sheet

The European Central Bank opted for a lower rate hike at its meeting on Thursday, raising its key rate from 1.5% to 2%.

It also announced its intention to reduce its balance sheet.

The move comes after the latest inflation data for the euro zone showed a slight slowdown in price growth in November, although the rate remained at 10% a year.

ECB President Christine Lagarde is due to give a press conference around 2:45 p.m. CEST.

Read the full story here.

-Jenni Reid

The Bank of England raises its key rate by 50 basis points and will continue to react “forcefully” if necessary

The Bank of England raised its main interest rate by 50 basis points on Thursday and signaled that further tightening would be needed to contain inflation.

The Monetary Policy Committee voted 6 to 3 in favor of raising the bank rate by half a percentage point to 3.5%. The rise marks a slowdown from November’s 75 basis point increase.

“The labor market remains tight and there has been evidence of inflationary pressures on domestic prices and wages which may point to greater persistence and thus warrant a further aggressive monetary policy response,” the MPC said Thursday in his statement.

Read the full story here.

-Elliot Smith

British Pound and Euro Fall Against US Dollar as Risk Aversion Returns

Sterling fell 0.9% against the U.S. dollar on Thursday morning to trade just above $1.23, as general risk aversion sentiment spread across currency markets, boosting the traditional greenback refuge.

The euro was also down 0.7% against the dollar, just above $1.06.

Bank of England sees half a point hike as inflation shows signs of peaking

The Bank of England faces the unenviable task of navigating a slowing economy, soaring inflation and an extremely tight labor market.

The market is broadly pricing in a 50 basis point hike on Thursday to take its main discount rate to 3.5%, a slowdown from November’s 75 basis point increase, the largest in 33 years.

After hitting a 41-year high in October, the UK’s annual consumer price index slowed to 10.7% in November, new figures showed on Wednesday.

Read the full story here.

-Elliot Smith

Swiss central bank raises interest rates by 50 basis points to counter “further spread of inflation”

The Swiss National Bank on Thursday raised its key rate for the third time this year, bringing it to 1%.

The central bank said it was seeking to counter “increased inflationary pressure and further spread of inflation” with the move.

Inflation in the country remains well above the Swiss National Bank’s 0-2% target, but is well below the rate hikes of neighboring European countries. Switzerland’s inflation rate held steady at 3% last month, after falling from a three-decade high of 3.5% in August.

Read the full story here.

– Hannah Ward-Glenton

Stocks on the move: Beijer Ref down 7%, Getinge down 5%

Beijing Ref Shares fell 7% in early trade to the Stoxx 600 low after the Swedish cooling technology firm announced the acquisition of US firm Heritage Distribution.

Swedish medical technology company Geting also fell 5.8%.

Reopening China ‘necessary’ to lower US inflation: Siegel

China’s economic reopening is overdue, but it’s critical to controlling inflationary pressures in the United States, Wharton School of Business professor Jeremy Siegel told CNBC’s “Street Signs Asia.”

“For the United States, we import so much from China that if those supply chains normalize it would bring inflation down, so I applaud China’s decision,” he said. “It’s way too late, it should have been earlier, but it’s necessary,” he said.

Siegel added that he expects the US Federal Reserve to raise rates again at the February meeting by 25 basis points before pivoting.

Jihye Lee

CNBC Pro: Missed the China Reopening Rally? Bank of America names global stocks to ride rematch

Investors will have a second opportunity to participate in the stock market rally after China announced an easing of Covid-19 restrictions, according to Bank of America.

The bank named more than 10 stocks after finding “green shoots of recovery in high-frequency data” that indicate rising profits for companies exporting to China.

CNBC Pro subscribers can learn more here.

—Ganesh Rao

Fed announces 50 bps rate hike

The Fed announced that it would raise interest rates by 50 basis points, marking the end of the pattern of 75 basis point hikes seen in recent months.

Before this decision, the Fed had raised rates by 75 basis points in the last four meetings. One basis point equals 0.01%.

The 50 basis point hike was widely expected ahead of the meeting.

This is the final policy decision expected from the central bank in 2022.

Alex Harring

Powell wants ‘much more evidence’ that inflation is slowing

Federal Reserve Chairman Jerome Powell said Wednesday that recent positive signs of inflation were not enough for the central bank to dampen interest rate hikes.

“It will take a lot more evidence to be confident that inflation is on a sustained downward path,” Powell said at his press conference after the meeting.

The comments came as the Fed raised its benchmark rate another half a percentage point and signaled that at least three more quarter points of hikes are ahead. The decision also comes a day after November’s consumer price index rose just 0.1%, indicating that inflation may have peaked.

However, Powell said inflation remained a problem.

“Pricing pressures remain evident across a wide range of goods and services,” Powell added.

—Jeff Cox

U.S. economy has slowed significantly from last year's rapid pace: Fed Chairman Jerome Powell

European markets: here are the opening calls

European markets are heading for a lower open on Thursday as investors react to the latest monetary policy decision and comments from the US Federal Reserve.

The United Kingdom FTSE100 the index is expected to open 5 points lower at 7,489, the German index DAX 51 points less at 14,410, France CAC down 20 points to 6,708 and Italy MIB FTSE down 116 points to 24,448, according to IG data.

There is revenue due to K&M and Currys, and data releases include new car registrations in November for several European countries. The Bank of England is expected to announce another rate hike to fight inflation.

—Holly Ellyatt

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