European Markets are trading lower this Thursday as new bank rate decisions are being waited for from the European Central Bank. The market reacts this way as investors digest the latest rates hike by the U.S. Federal Reserve on May 3 2023, by 25 bps.
European Markets react to U.S. latest rates hike
The ECB is widely expected to raise its interest rates yet again as it attempts to tame the inflation rates that are running wild. Most market watchers expect a similar hike with the U.S. Federal Reserve of 25 basis points, though a bigger hike may also be ruled out.
The new rates decision is set to be published at 1.15 p.m. London time, with ECB President Christin Lagarde giving a statement shortly after. The markets seem wary of a major hike, as the U.S. got one yesterday. The federal funds rate ranges from 5% to 5.25%, the highest range since August 2007.
However, the Fed has hinted at a rate hike pause. In its post-meeting statement, the Fed said that its committee anticipates that some additional policy firming would be appropriate for it to hit its 2% inflation goal.
This means it may pause or pivot rate hikes fueled further by the U.S. bank’s collapse. Keep watching Fintech Express for more updates on Finance and banking stories.