The European markets are in deep red, the Stoxx 600 is diving 2.3%

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European stocks continue to plummet on Thursday as concerns about the resilience of the world’s largest economies return to the fore in an environment of high and persistent inflation forcing central banks to raise interest rates in succession.

The Federal Reserve yesterday raised interest rates the most since 1994 as it continues its quest to curb the highest inflation in four decades.

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Yesterday decision of the US Federal Reserve to raise interest rates by 75 basis points to 1.5% to 1.75% – the highest since the March 2020 pandemic outbreak – confirmed analysts’ forecasts that the Fed would move even faster as price rally does not seem to be slowing down.

At the press conference after the monetary policy decisions, the Fed chairman, Jerome Powell, however, tried to appear reassuring noting that “the current increase of 75 bp is unusually large” and adding that he does not expect “similar moves of this magnitude to be common”. He noted, however, that he expects the July meeting to result in an increase of 50 to 75 points.

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The Fed’s example followed today Bank of Englandthe Central Bank of Switzerland and the Hong Kong Monetary Authorityamong other things, raising interest rates to deal with the inflation rally.

The picture in the markets today is aggravated by the new jump in gas prices in Europe as Russia further restricted flows to the continent.

On the board, the Stoxx 600 index plunged 2.3% to 403.54 points. The pan-European index is heading for the lowest closing since February 2021.

The German DAX fell 2.85% to 13,101.01 points, the French CAC 40 lost 2.25% to 5,893.21 points, while the British FTSE 100 plunged 2.35% to 7,101.31 points.

In the periphery, the Italian FTSE MIB falls 3%, while the Spanish IBEX 35 falls by 1.5%.

European indices closed with strong gains yesterday in its wake Communication from the European Central Bank that it plans to intervene to combat fragmentation in the Eurozone, announcing that it has been instructed to design a new tool that will be evaluated by the Board. of the bank at one of its next meetings.

Source: Capital

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