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European stock markets close higher after ECB and BoE raise interest rates as expected

European stock markets closed higher on Thursday (2) after the European Central Bank (ECB) and the Bank of England (BoE) raised interest rates by 50 basis points, as expected by the market.

Furthermore, comments from directors of both institutions continue to reinforce that the monetary tightening should continue.

In London, the FTSE 100 rose 0.76% to 7,820.16 points. The DAX index, in Frankfurt, was up 2.16%, to 15,509.19 points – the highest level in a year.

The BoE decided to raise its benchmark interest rate by 50 basis points, to 4%. Then, the president of the institution Andrew Bailey warned that the “risks remain high” and that the English BC has already “done a lot with the interest rate, but it is too early to declare victory”.

The ECB, in turn, followed the same path and also opted for 0.5%: the refinancing rate will increase from 2.50% to 3%, that of deposits, from 2% to 2.50%, and that of loans, from 2.75% to 3.25%.

The president of the Central Bank of the common bloc, Christine Lagarde, pointed out that, in all scenarios, significant increases in interest rates will be necessary, at a constant pace. “I don’t think of a scenario that doesn’t have an increase of 50 basis points in March, only in an extreme case. We know we’re not done.”

“While the tone of both press conferences seems to suggest that both central banks have to go further in raising rates, the markets seem to be of the view that we are close to a peak as far as rates are concerned, and even if we are not there, we are close”, analyzes the chief economist of CMC Markets, Michael Hewson.

He also cites the same perception with regard to the Federal Reserve (Fed): “the markets do not seem to believe in the BCs and think that, even if they go up again, they will have to cut by the end of the year”.

The CAC 40, in Paris, advanced 1.26%, to 7,166.27 points, and the FTSE MIB, in Milan, closed up 1.49%, to 27,100.62 points.

Telecom’s shares jumped 8.70%, after the company announced that it received a proposal from the American manager KKR for a stake in its fixed-line infrastructure and management unit.

In Madrid, the Ibex 35 index rose 1.53% to 9,237.20 points. Finally, on the Lisbon Stock Exchange, the PSI 20 rose 0.85% to 5,957.07 points. Quotes are preliminary.

Source: CNN Brasil

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