European stocks continued to make strong gains on Thursday after the Bank of England’s surprise move to raise interest rates in the wake of yesterday’s decision by the Federal Reserve to take action to counter the inflation rally.
The Bank of England became the first central bank in the developed economies to raise its key interest rate to tackle inflation. In particular, the BoE raised its key interest rate by 15 basis points to 0.25% in today’s session, disproving analysts who expected it to hold it at 0.1%.
It was preceded by the decision of the Federal Reserve on Wednesday to proceed faster with the reduction of the quantitative easing program it is implementing in order to be able to start interest rate increases earlier in 2022.
In particular, the Fed announced that it will shrink monthly bond purchases at twice the rate it had previously announced, by $ 30 billion a month, with the program ending in March 2022. In its forecasts released Fed central bank officials see even three rate hikes in 2022, with two more to follow next year.
The Fed’s decisions follow the jump in inflation to 6.8% in November, the highest level since 1982.
On the board, the pan-European STOXX 600 index rose 1.7% to 478.64 points.
The German DAX gained 1.7% to 15,746.28 points, the French CAC 40 rose 1.6% to 7,037.52 points, while the British FTSE 100 rose 1% to 7,245.11 points.
In the periphery, the Italian FTSE MIB gained 1.15%, while the Spanish IBEX 35 jumped 1.8%.
The attention of investors is now focused on the European Central Bank, which is holding its last meeting for 2021 today.
The ECB is expected to reiterate that the Pandemic Extraordinary Bond Purchase Program (PEPP) is expected to be completed in March 2022, with the central bank adding more weight to the Regular Purchasing Program (APP) next year to continue providing support. in the European economy.
The Bank of England is also meeting today, which is expected to keep its interest rates unchanged as the appearance of the’s micron mutation poses new risks to the economic recovery, as analysts estimate.
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