indexes in this article
Germany’s leading DAX index opened Corpus Christi down 0.33% to 13,440.43 points. Over the next course it yielded further. Sometimes, the 13,100 mark has dropped. The daily low fell to 13,007.91 points. At the end of trading, the stock market barometer fell 3.31% to 13,038.49 points.
The Fed raises the interest rate
The Fed had raised US interest rates by 0.75 percentage points the night before, a little more than most pundits initially expected. But some had thought even more possible than this, the biggest rate hike since 1994. The Fed is fighting the highest inflation of the last 40 years.
Fed chief Jerome Powell is trying to balance the tightening of the monetary policy and calm the markets: “Don’t expect hikes of 75 basis points to become commonplace,” he said. This particular statement had a positive effect on New York stock prices. Goldman Sachs economist Jan Hatzius, for example, had recently envisioned two of these steps below.
rate increase also in Switzerland
Meanwhile, the Swiss National Bank (SNB) has surprisingly increased the reference rate significantly. The central bank raises the benchmark interest rate by 0.50 percentage points to minus 0.25%. In this way, monetary watchdogs want to counter inflationary pressures. An increase in interest rates was thought possible in advance, but not taken for granted, especially since inflation in Switzerland has recently increased, but not as much as in other regions of the world.
The Bank of England follows the Fed and the SNB
As expected, the UK central bank has further tightened its monetary policy. The Bank of England said the key interest rate will rise by 0.25 percentage points to 1.25 percent on Thursday following the MPC’s monetary policy committee meeting in London. Analysts expected this during the move.
As of Tuesday, the DAX had continued its descent, triggered by fears of inflation and recession, to below 13,300 points and had lost nearly ten percent in a few days since its intermediate high on Whit Monday. A broader rate move was discounted with this sell-off. Market nervousness remains high, as current taxes show once again.
Editorial financeen.net / dpa-AFX / Dow Jones Newswires
Image sources: PhotoSTS / Shutterstock.com, Julian Mezger for Finanz Verlag