Europe: Equities open higher on Fed news

[LONDON] European stock markets opened higher Friday after US Federal Reserve boss Jerome Powell indicated that US interest rates will stay ultra low for as long as needed to recover from the coronavirus pandemic.

In initial trade, London's benchmark FTSE 100 index gained 0.2 per cent to 6,013.46 points.

In the eurozone, Frankfurt's DAX 30 index added 0.4 per cent to 13,143.13 points and the Paris CAC 40 was up 0.3 per cent at 5,029.14.

In a much-anticipated speech on Thursday, Mr Powell said the Fed would be in no rush to reel in inflation, even if it overshoots the central bank's 2 per cent target, instead opting for an average that took into account periods of weak price rises.

The Fed chief added that policymakers would stick with the new framework "for some time", indicating that the era of cheap borrowing is here for the foreseeable future.

"Powell brought a new policy approach on the table at yesterday's Jackson Hole meeting, tweaking the Fed's inflation target from 2 per cent to '2 per cent over time' as expected," said Swissquote Bank senior analyst Ipek Ozkardeskaya.

"The latter change will allow the Fed to keep interest rates low for longer and to concentrate on achieving a healthier jobs market amid the Covid-19 pandemic havoc."

AFP