European markets closed slightly higher on Friday as traders reacted to the European Central Bank’s suggestion that its latest hike may be its last.
The regional Stoxx 600 ended up 0.2%, with most sectors and major bourses in positive territory. Household goods led the gains, up by 1.4%, while luxury stocks got a boost from Chinese retail sales figures.
The Stoxx 600 index climbed 1.5% Thursday, its best session since the start of June, according to LSED figures.
The ECB increased interest rates by 25 basis points, a 10th consecutive hike taking its main rate to a record high of 4%. New staff projections revised its inflation forecasts for this year and next slightly higher, to 5.6% and 3.2%, though nudged its 2025 forecast lower, from 2.2% to 2.1%. Staff also revised economic growth expectations for the euro zone lower.
But perhaps the biggest development came in a firm suggestion ECB Governing Council members do not expect further rate hikes at this time, and that rates may be held steady for some time.
“Based on its current assessment, the Governing Council considers that the key ECB interest rates have reached levels that, maintained for a sufficiently long duration, will make a substantial contribution to the timely return of inflation to the target,” the central bank said in a statement.