The European rebound that had begun to show signs of life following Credit Suisse’s recent troubles has stalled as Switzerland and Norway, and possibly the Bank of England, continue to raise interest rates.
Despite the Federal Reserve hinting at a pause after its latest quarter-point rise on Wednesday, Switzerland’s SNB raised rates again, causing the European-wide STOXX 600-share index to fall by 0.75%, with banks and insurers suffering the most significant losses.
Norway has also hiked its rates, although MSCI’s main world share index is still in positive territory after overnight gains in Asia.
Sharp Interest Rate Rises Continue
The year-long cycle of sharp interest rate rises in Europe appears to be far from over, with Norway and Switzerland joining a growing list of countries that are tightening their monetary policies.
Switzerland’s SNB raised its interest rates in spite of its recent troubles, stating that the measures announced at the weekend have put a halt to the crisis. Germany’s Bundesbank chief also expressed a similar view overnight.
Meanwhile, the Bank of England is expected to follow suit, with many predicting that it will raise interest rates by the end of the year to curb rising inflation.
Stock Markets React
The news of continued interest rate hikes has affected stock markets, with the STOXX 600-share index falling by 0.75%, and banks and insurers suffering the most significant losses with drops of 1.6% to 2%.
Despite this, MSCI’s main world share index is still in positive territory, buoyed by overnight gains in Asia.
While the news of continued interest rate hikes has caused some uncertainty in the stock markets, it is important to note that the measures are being taken to curb rising inflation and maintain stability in the economy.
As the European rebound continues, it is essential to keep an eye on how these interest rate hikes will affect the economy in the long run and adjust strategies accordingly.