European stocks slide as investors weigh up week of central bank meetings
European stocks fell Friday, with losses driven by autos, while investors continued to weigh up policy decisions by central banks this week.
At Thursday’s European Central Bank meeting, President Christine Lagarde would not rule out the possibility of a 2022 interest rate hike, as she acknowledged that inflation pressures in the eurozone are now “tilted to the upside.” She indicated the central bank would assess inflation pressures in detail and any response needed at the next meeting in March.
“Highly indebted eurozone governments look better placed to cope with tighter monetary policy than they were when the ECB last raised interest rates, in 2011,” said Jack Allen-Reynolds, senior Europe economist at Capital Economics, in a note. “That said, there is still plenty of scope for even-higher-than-expected inflation or a policy error to cause renewed turmoil in the bond markets.”
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