Investing.com – The US central bank has decided to raise interest rates by 0.75%, higher than originally expected but at the level expected by investors since last Friday. Indeed, inflation data released last week has changed market perception.
Last week’s data had exceeded expectations and showed that Fed policy was less effective than expected. Following this, investors expect the Fed to continue tightening its monetary policy at a faster pace.
What impact on markets and the economy?
As soon as the numbers came out, the markets started to move with high volatility and then headed down. Indeed, the 0.75% rate hike signals an even more aggressive trend than before.
However, the larger rise could have an even greater impact on the economy and could accelerate a “hard landing”.
The market response was not long in coming
The lost its gains for the day in the same way as the before rebounding. The other stock markets in the world could follow in the red as soon as they open.
In the forex market, the pair fell before recovering as the rate differential still threatens to widen in favor of the dollar as the ECB is slow to initiate a rate hike. The and pairs saw their value rise before falling.
In the energy market, the fell as traders see an impact of rising rates on economic growth and therefore on demand for crude.
For their part, cryptos initially fell before rebounding.