Global Markets React to Federal Reserve's Rate Adjustment

Global stock markets experienced a significant downturn as the U.S. Federal Reserve signaled a more cautious approach to interest rate cuts. The announcement impacted currencies, with the dollar strengthening against the yen, and affected government bond yields worldwide. Concerns also arose over potential future inflationary pressures from U.S. policies.

Global stock markets faced a sharp decline on Thursday after the U.S. Federal Reserve announced a tempered approach to rate cuts, marking a tumultuous period for central banks worldwide. This move resulted in the highest U.S. Treasury yield since May, sparking market volatility.

Following the Fed's announcement, the Bank of Japan maintained its steady rates, contrary to market expectations of a potential January hike. Consequently, the yen weakened, while the dollar surged against multiple currencies, including an impressive 1.9% gain on the yen.

Despite anticipated rate decisions from Sweden and Norway, economic observers are primarily focused on the Fed's influence. As U.S. stock indexes recorded their steepest daily losses in months, repercussions spread to bonds and European markets. Concerns linger over inflationary effects from U.S. policy changes, with investors closely monitoring central bank strategies moving forward.

(With inputs from agencies.)