December 16, 2021: European stocks opened higher on Thursday before interest rate decisions in Britain and the eurozone, after the US Federal Reserve sped up stimulus tapering and flagged multiple hikes in borrowing costs, as reported by APP.
London's benchmark FTSE 100 index rallied 1.2 percent to 7,255.45 points ahead of the Bank of England's monetary policy announcement scheduled for 1200 GMT.
In the eurozone, the Paris CAC 40 index won 1.6 percent to 7,035.49 points and Frankfurt's DAX also gained 1.6 percent to 15,718.24, before the European Central Bank's decision at 1245 GMT.
“Today's European market session looks set to be a strong one, and with the Fed meeting now in the rear-view mirror, all attention now turns to BoE and ECB decisions,” said CMC Markets analyst Michael Hewson.
Most Asian markets also rose Thursday after the Fed laid out a more hawkish path by speeding up the taper of its pandemic financial support and indicated a number of interest rate hikes over the coming years.
Central banks are grappling with red hot inflation fuelled by reopening economies, runaway energy prices, the supply crunch and resurgent commodity markets.
However, institutions also remain on standby should the Omicron Covid variant spark new lockdowns and shutter swathes of the world economy once more.
“Confirmation that the Federal Reserve is to tap slightly harder on the monetary brakes was both expected and well-received, as investors appreciated the increased clarity of the road ahead,” added Interactive Investor analyst Richard Hunter.
“The tapering programme should now end in March, easing the way to introduce interest rate hikes in an effort to curb inflation, which is now running hot.
“At the same time, the Fed left the door open not only to consider the impact of the Omicron variant as the economic damage becomes clearer, but also noting that maximum employment was required before hikes could be entertained.”
Fed policymakers said they would end their bond-buying programme in March, allowing them to begin hiking borrowing costs.
A closely watched gauge of likely rate moves suggests they could lift them six times before the end of 2023.
The news, which met expectations, helped soothe traders' concern that officials risked letting prices run out of control with US consumer inflation sitting at a four-decade high.
AFP/APP
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