LONDON: Europe’s stock markets fell further Wednesday in opening deals after Federal Reserve Chair Jerome Powell warned that a quicker pace of interest rate hikes might be required to fight inflation.
London’s benchmark FTSE 100 index of top blue-chip companies fell 0.3 percent to 7,898.60 points, compared with Tuesday’s closing level.
In the eurozone, Frankfurt’s DAX index shed 0.2 percent to 15,535.77 points and the Paris CAC 40 lost 0.3 percent to 7,317.18 points.
Asian indices also sank after Powell dealt a hammer blow to faint hopes that the Fed could pause its rate tightening soon.
Stocks mostly rise before Fed testimony on US economy
“The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated,” Powell said in much-anticipated testimony to US lawmakers.
“If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes.”
Investors are now betting on the Fed to lift rates 50 basis points at its next meeting later this month.
That would be twice as much as its last gathering.
“His comments that the pace of rate hikes may need to be accelerated, and that the likely rate peak could well be higher than expected were not well received by markets, but given the strength of recent data, the change of tone should not have been surprising,” noted CMC Markets analyst Michael Hewson.
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