Both the Fed and the ECB increased interest rates!

Both central banks in USA and Europe decided to furtherly remain in the same monetary policies that were followed the previous periods. Interest rates were raised by 25 base points in both regions resulting in 5.25% and 3.75% for USA and Eurozone respectively.

The European competent authorities decided to continue raising interest rates and will do so in the future too, if inflation doesn't come down to the mid-term goal of 2%. It's important to notice here that headline inflation was 7% in April, while core inflation for the same period stood at 5.6%, still far enough from the 2% goal.

Yesterday (a day before ECB's decision), US Federal Reserve also increased interest rates after an unanimous voting process, despite the fears of further bank failures. As ECB's policies, Fed also targets for a 2% inflation rate, which is also far enough considering that inflation stood at 5% in March 2023.

The difference between the two central banks seems to be their future expectations and moves. ECB's president Christine Lagard announced : "We are not pausing, that is very clear. We know that we have a lot of ground to cover.", which clearly suggest that there is still a long way for interest rates hikes to slowdown.
On the other hand, USA's 10th interest rate hike in 14 months seems to be planned as the last one if economic environment and inflation come back to normal levels. Jerome Powell stated among other things that : "If you add up all the tightening that’s going on through various channels, we feel like we’re getting close or are maybe even there".

As it is stated in another article stock markets move according to their expectations and this time was no exception. Markets in Europe and USA were already prepared for the interest rates hikes and despite "negative" news there weren't adverse consequences for stocks. Dow lost 1.05% of its value, SP500 0.74%, NASDAQ-100 0.43% and the European STOXX-600 decreased by 0.46%, after the news were spread to the public.