European stock markets extended their losses as investors reacted to the Federal Reserve’s latest policy stance, which underscored persistent inflationary pressures and the likelihood of elevated interest rates well into 2024. The Stoxx 600 index dropped nearly 1%, with banks and industrials leading the decline. Major indices in Germany, France, and the UK also suffered sharp falls, reflecting global apprehensions.
FOMC projections revealed a cautious economic outlook, signaling that further tightening remains on the table, albeit at a slower pace. This dampened market sentiment, with yields on European government bonds spiking as traders recalibrated expectations for the ECB’s next moves. The ripple effect from the U.S. monetary policy weighed heavily on risk appetite, adding to fears of an economic slowdown in the Eurozone.
