Dax falls by 0.5 percentage points after rate hike

Dusseldorf The German stock market reacted to the first interest rate hike in the euro zone in eleven years with significant price losses. After the interest rate decision, the leading index Dax increased its daily losses and was last listed 0.8 percent down at 13,132 points.

The European Central Bank announced in the afternoon that it would raise the main refinancing rate (base rate) and the deposit rate, which is also important at the moment, by 0.50 percentage points. A step of 0.25 percentage points was expected, but recently there had already been speculation about an increase of 0.5 percentage points. Therefore, the reaction initially remains moderate.

“The ECB’s 50 basis point rate hike is very appropriate given inflation of over 8 percent and the weakness of the euro,” commented Michael Heise, chief economist at HQ Trust, on the decision. “Further rate hikes will follow, which will bring the key ECB interest rate to 1 percent by the end of the year – and the deposit rate to 0.5 percent.”