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European markets fall after hawkish Fed comments; Stoxx 600 down 1%

The Bank of England saw a half point increase as inflation shows signs of peaking

The Bank of England faces the unenviable task of coping with a slowing economy, skyrocketing inflation and an extremely tight labor market.

The market is broadly pricing in a 50 basis point increase on Thursday to bring the key bank rate to 3.5%, a slowdown from November’s 75 basis point increase, the largest in 33 years.

After hitting a 41-year high in October, the annual increase in the UK consumer price index slowed to 10.7% in November, new figures revealed on Wednesday.

Read the full story here.

—Elliot Smith

Sterling, Euro Falls against the US Dollar as Risk Aversion Returns

Sterling fell 0.9% against the US dollar Thursday morning to trade just above $1.23 as broad risk averse sentiment spread across currency markets, boosting the traditional safe haven greenback.

The euros also fell 0.7% against the dollar to just over $1.06.

Swiss central bank raises interest rates by 50 basis points to prevent ‘further spread of inflation’

The Swiss National Bank raised its reference rate to 1% for the third time this year on Thursday.

The central bank said it wanted to counter “increased inflationary pressures and a further spread of inflation” with the move.

Inflation in the country remains well above the Swiss National Bank’s target of 0-2%, but is well below the sky-high rates of neighboring European countries. Swiss inflation remained stable at 3% last month, after falling from a three-decade high of 3.5% in August.

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Read the full story here.

-Hannah Ward Glenton

Stocks in motion: Beijer Ref 7% lower, Getinge 5% lower

Bavaria ref stock shares fell 7% in early trading to the bottom of the Stoxx 600 after the Swedish refrigeration technology company announced its acquisition of US-based Heritage Distribution.

Swedish medical technology company Getinge also fell by 5.8%.

China’s reopening is ‘needed’ to bring down US inflation: Siegel

China’s economic reopening is late, but much needed to contain inflationary pressures in the US, said Jeremy Siegel, a professor at the Wharton School of Business on CNBC’s “Street Signs Asia.”

“For the US, we import so much from China, normalizing those supply chains would bring inflation down, so I applaud China’s move,” he said. “It is much too late, it should have been sooner, but it is necessary,” he said.

Siegel added that he expects the US Federal Reserve to raise interest rates by another 25 basis points at its February meeting before turning around.

Jihy Lee

CNBC Pro: Missed China’s Reopening Rally? Bank of America calls global stocks to ride the second leg

Investors will have a second chance to join the stock market rally after China announced an easing of Covid-19 restrictions, Bank of America said.

The bank named more than 10 stocks after finding “green shoots of recovery in high-frequency data” pointing to rising earnings among companies exporting to China.

CNBC Pro subscribers can read more here.

— Ganesha Rao

Fed announces rate hike of 50 points

The Fed announced it would raise interest rates by 50 basis points, ending the pattern of 75 point hikes of recent months.

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Before this move, the Fed had raised rates by 75 basis points in its last four meetings. One basis point is equivalent to 0.01%.

The 50 basis point increase was widely expected prior to the meeting.

It is the final policy decision expected from the central bank in 2022.

Alex Harring

Powell wants “substantially more evidence” that inflation is cooling

Federal Reserve Chairman Jerome Powell said Wednesday that the recent positive signs for inflation are not enough for the central bank to ease interest rate hikes.

“Substantially more evidence will be needed to be confident that inflation is on a sustained downward path,” Powell said at his post-meeting press conference.

The comments came as the Fed raised its benchmark rate by another half a percentage point and signaled that at least three-quarters of a point increase was still to come. The decision also comes a day after the consumer price index was just 0.1% higher in November, an indication that inflation may have peaked.

However, Powell said inflation remains a problem.

“Price pressure remains evident across a broad range of goods and services,” Powell added.

—Jeff Cox

European markets: Here are the opening calls

European markets are heading for a lower opening price on Thursday as investors react to the latest monetary policy decision and comments from the US Federal Reserve.

That of the UK FTSE 100 index is expected to open 5 points lower at 7,489, Germany DAX 51 points lower at 14,410, France CAC 20 points lower at 6,708 and that of Italy FTSE MIB Down 116 points at 24,448, according to data from IG.

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Revenue is due from K&M and Currys, and data releases include new car registrations in November for several European countries. The Bank of England is expected to announce another rate hike to fight inflation.

— Holly Ellyatt

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