European markets set to rally slightly after record ECB rate hike

European markets looked set to open slightly higher on Friday as investors react to a record rate hike from the European Central Bank and further comments from Federal Reserve Chairman Jerome Powell.

On Thursday, the European Central Bank announced an interest rate hike of 75 basis points, bringing its benchmark deposit rate to 0.75%. The bank also revised its inflation expectations upwards – to 8.1% on average in 2022 – and said it planned to raise rates further as “inflation remains far too high and is expected to remain above target for an extended period”.

Meanwhile, the Fed’s Powell said on Thursday that the US central bank would raise rates to fight inflation “until the job is done.”

“History strongly cautions against premature policy easing,” Powell told the Cato Institute, a Washington, D.C.-based libertarian think tank. “I can assure you that my colleagues and I are strongly committed to this project. and we will remain there until the task is finished.”

Asia-Pacific markets were up as investors digested the flurry of news from central banks, and US stock futures were also in the green.

Meanwhile, world leaders paid tribute to Queen Elizabeth II, after Britain’s longest-serving monarch died on Thursday at the age of 96.

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