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Stocks surge after Powell points to rate easing

Wall Street
Wall Street markets surged after the speech

Stock markets rallied after Federal Reserve chair Jerome Powell said the pace of interest rate rises may begin to slow from this month.

Wall Street rose strongly and soon after the opening in London the FTSE 100 was up 15 points at 7,588 while the FTSE 250 advanced 225 points to 19,388.

In a speech in Washington Mr Powell said: “It makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down.

“The time for moderating the pace of rate increases may come as soon as the December meeting. We will stay the course until the job is done.”

The markets were lifted by indications that the Fed will now ease off after imposing its most aggressive monetary tightening since the 1980s, raising its benchmark interest rate by 75 basis points at its past four meetings.

At the close, the Dow Jones Industrial Average was up 2.18%, while the S&P 500 added 3.09% and the Nasdaq Composite rose 4.41%.

Mr Powell said that he was still hopeful the US economy would see a “soft landing” by avoiding recession and inflation falls back to target.

“It is still achievable,” he said.

His comments came after Bank of England chief economist Huw Pill said the Bank has “more to do” on raising interest rates to control rising costs, but that borrowing costs may not rise as much as financial markets have priced in. Full story here

Sterling made strong gains against the US dollar this morning, up 0.3% from $1.207 to $1.210.

House price growth slows

House prices across the UK tumbled 1.4% in November compared with October, the biggest monthly drop since June 2020, according to Nationwide Building Society. Full story here

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