Central Banks slowdown interest rate hikes!

📉Throughout this week, we have had big movements in equities due to important decisions taken by Central Banks. On Wednesday, the FED confirmed that it was going to raise interest rates by 50 basis points, a decision that was followed by the ECB and the BoE.

📉This is important news for the market, as after several rate hikes of 75 basis points, the world’s major central banks have decided to lift their foot off the accelerator. Despite this news, the market has reacted bearishly, as after statements from Powell and Lagarde confirming that we are still far from easing, it has fueled investor uncertainty going into next year.

📉The market is currently forecasting that interest rates in the US will rise to 5% (currently at 4.5%), while in Europe they will rise to 3% (currently at 2.5%). In the case of Europe, it seems more logical that easing adjustments will be delayed, as they recently reached the peak of inflation (in October) and have a lot of work ahead to reduce the CPI of their respective countries. As for the US, after 5 consecutive CPI reductions (CPI data in November was 7.1%), investors expect the FED to start with interest rate reduction policies in the second half of next year.

Source: Financial Times