European markets move higher after record ECB interest rate; BoE postpones the meeting

European markets were higher on Friday as investors reacted to a record rate hike by the European Central Bank and further comments from central bank chief Jerome Powell.

The pan-European Stoxx 600 was up 1.7% in afternoon trade, with all sectors trading in the green. Basic resources were 3.1% higher, while banks were up 2.3%.

On Thursday, the European Central Bank announced a rate hike of 75 basis points, taking its benchmark deposit rate to 0.75%. The bank also revised its inflation expectations – to an average of 8.1[ads1]% in 2022 – and said it expects to raise rates further as “inflation remains far too high and is likely to remain above target for an extended period.”

Meanwhile, the Fed’s Powell said on Thursday that the US central bank will raise interest rates to tackle inflation “until the job is done”.

“History is a strong warning against loosening policy prematurely,” said Powell of the Cato Institute, a libertarian think tank based in Washington, D.C. “I can assure you that my colleagues and I are strongly committed to this project, and we will continue with it until the job is done.”

Asia-Pacific markets were higher as investors digested the flurry of central bank news, and US stock futures were also in the green.

Meanwhile, world leaders paid tribute to Queen Elizabeth II after Britain’s longest-serving monarch died on Thursday aged 96.

The Bank of England said on Friday it would postpone its September monetary policy committee meeting by a week as the country enters a period of national mourning.

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