Fears of rising inflation, coupled with tighter US Federal Reserve policies, prompted two major European central banks to tighten credit in a bid to fight inflation.
A decline in European markets occurred this Thursday, June 16, before the surprise announcement by the Swiss National Bank (SNB) to increase its interest rates by 0.5% basis points for the first time in 15 years. Also, the Bank of England announced a 0.25% rate hike, which now stands at 1.25%.
These credit tightening measures in Europe, come after the biggest increase in interest rates since 1994, by the US Federal Reserve, as reported by CriptoNoticias. The Fed increased its rates by 0.75%, which are now between 1.5% and 1.75%. Likewise, two more increases are expected in the year of at least 0.5%, according to statements by Jerome Powell, president of the Fed.
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Global markets continue to contract
Among the reactions of world markets to increases in interest rates, major European indices like FTSE, STOXX and CAC are downwith setbacks in the last 24 hours of 2.68%, 2.04% and 2.51%, in figures from CNBC.
Also, the shares in the United States, which had rebounded after the Fed’s announcement on Wednesday the 15th, today show red numbers. Both Dow Jones (-2.25%), Nasdaq (-2.6%) and S&P 500 (-2.5%) declined in the last 24 hours. Even the dollar, which had shown an upward trend in recent days, fell 0.55%.
In the case of bitcoin, which remains closely coupled to stocks, its price fell 6.5% in the last 24 hours and it keeps fluctuating around USD 21,000.
Inflation in the United States for the month of May was 8.63%, the highest value in four decades, as reported by CriptoNoticias. This figure is more than four times the 2% cap that the Fed had set for this year. Now the Fed expects year-end inflation to hit 5.2%. In Europe, on the other hand, preliminary estimates from the European statistics office placed annual inflation in the Eurozone at 8.1% at the end of May, as reported by CriptoNoticias.