On the day of the interest rate decision by the US Federal Reserve (Fed), the Dax attempted to recover after six trading days with losses and rose by 1.36 percent. The fact that the ECB wants to counteract the unrest on the financial markets is also helping to calm the nervous markets.
Ahead of what is likely to be the next interest rate hike by the US Federal Reserve in the evening, the German stock market swung onto a recovery course on Wednesday. After six trading days with some heavy losses, the leading index Dax rose by 1.36 percent to 13,485.29 points. The MDax for medium-sized stocks gained 1.62 percent to 27,784.27 points.
Investors are currently wondering whether the Fed will raise the key interest rate by 0.50 percentage points or by 0.75 points straight away in order to get the high inflation under control. According to experts, the worse case for investors of a larger interest rate step could already be anticipated in view of the market weakness of the past few days.
The fact that the European Central Bank (ECB) wants to counteract the unrest on the financial markets is also helping to calm the recently very nervous markets. In response to the recent unrest on the financial markets, the ECB wants to use funds from the Corona emergency purchase program Pepp, which expired at the end of March, particularly flexibly. At the same time, the Council instructed the responsible committees of the Eurosystem, together with the central bank, to accelerate the completion of a new crisis instrument.
The financial and budgetary policy spokesman for the CSU state group in the Bundestag, Sebastian Brehm, described the ad hoc meeting as a “clear monetary policy warning signal”. The ECB’s monetary policy triggered a “massive surge in inflation”. “The ECB has neglected currency stability in favor of state financing in southern Europe and has thus taken the pressure off for reform,” criticized Brehm. The end of negative interest rates announced by the ECB “came too late and was too weak”.
At its meeting in Amsterdam last week, the ECB announced that it would raise interest rates by 0.25 percentage points at its next regular meeting on July 21; In September, “a larger rate hike may also be appropriate”. Net bond purchases under the APP bond purchase program are expected to end by the end of June.
