[1/3] Chairman of the Federal Reserve Jerome Powell listens during a Senate Banking Committee hearing on "The Quarterly CARES Act Report to Cong

Analysis: Markets to central bankers: we don't believe you

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2023-02-04 17:00:07

[1/3] Chairman of the Federal Reserve Jerome Powell listens during a Senate Banking Committee hearing on "The Quarterly CARES Act Report to Congress" on Capitol Hill in Washington, U.S., December 1, 2020. Susan Walsh/Pool via REUTERS/File Photo

LONDON, Feb 2 (Reuters) - Central bank policy announcements, once viewed as the rule book for how markets should move, are not resonating with traders any more.

Take Wednesday's Federal Reserve rate move. The central bank lifted its main funds rate by 25 bps to its highest since 2007 as it continued its fight against inflation.

Yet the S&P 500 (.SPX) hit a five-month high, as traders focused resolutely on the idea that the world's most influential central bank would change course soon.

Over in Europe, the European Central Bank delivered a hefty 50 bps hike on Thursday and promised more of the same for March and beyond.