The picture is improving in European markets, with most indices continuing to gain ground after three straight sessions of decline amid fears that central banks on both sides of the Atlantic in their bid to tackle rallying inflation will lead their economies to recession.
In the US, Minneapolis Fed President Neel Kashkari on Tuesday reaffirmed the central bank’s determination to rein in inflation, underlining his concern about the risk of “destabilizing inflation expectations”.
If that happens, the Fed will likely have to launch very aggressive rate hikes to restore balance, he warned.
His remarks come shortly before Federal Reserve Chairman Jerome Powell’s much-anticipated speech on Friday at the bank’s annual economic symposium in Jackson Hole, Wyoming.
In Europe, the traders raise stakes that the European Central Bank will resort to more aggressive measures to tame inflation.
In particular, as reported by Bloomberg, based on swaps linked to the dates of ECB decisions, the market now expects the Bank to raise interest rates by one percentage point by the October meeting, which means that the deposit rate will reach to 1%. This is the first time traders have bet on such a sizeable rate hike for the ECB.
More details on the ECB’s plans in the coming months are expected to come from the minutes of the bank’s latest monetary policy meeting, which will be published on Thursday.
On the board, the pan-European Stoxx 600 index gained 0.2% to 432.16 points.
Germany’s DAX edged up 0.1% to 13,212.16 points, France’s CAC 40 gained 0.2% to 6,375.86 points, while Britain’s FTSE 100 lost 0.3% to 7,469.78 points.
In the region, Italy’s FTSE MIB marginally gains 0.02%, while Spain’s IBEX 35 loses 0.3%.
Source: Capital
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