(News Bulletin 247) – The Parisian index once again broke a new record during the session this Thursday.

The Paris Stock Exchange can thank the American Federal Reserve (Fed). Its flagship index, the CAC 40, once again broke its session record this Thursday and crossed 7,600 points for the first time in its history. At 9:17 a.m. the Parisian index increased by 1.45% to 7640.59 points.

Like the American indices – the Dow Jones broke a new record and exceeded 37,000 points – the Parisian market is supported by the outcome of the meeting of the American Federal Reserve (Fed) on Wednesday evening.

The Fed, as widely anticipated by the market, kept its key rates unchanged and its president, Jerome Powell, was careful not to declare victory in the fight against inflation during his press conference. He also did not rule out the possibility of a further increase in key rates, if economic data justified it, according to Bloomberg.

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Towards significant rate cuts?

The central banker nevertheless acknowledged that Fed members had discussed rate cuts.

Above all, the market was delighted with the “dot plots”, or the economic and monetary projections of the members of the Fed. According to this document, the central bank members’ median projection for 2024 key rates stands at 4.6%, which implies a total of 75 basis points (0.75%) of rate cuts per year. next (or three cuts of 25 basis points). According to Bloomberg, economists did not expect as much.

“The December meeting made no changes to the Federal Reserve’s monetary policy, but it was still important. The new economic projections showed significantly lower inflation numbers, including an additional rate cut in the “dot plot” of the participants (at the meeting, editor’s note) for 2024, and no upward movement in their estimate of the long-term equilibrium rate”, comments Bill Papadakis, strategist at Lombard Odier.

“Fed Chairman Jerome Powell not only acknowledged the progress made so far in his remarks, but also expressed optimism about the path forward. More importantly, he did not attempt to oppose current market expectations for substantial rate cuts next year. We view this as a strong signal that the Federal Reserve will be prepared to move to rate cuts sooner than expected.” , he continues.

According to the CME Group’s FedWatch tool, investors now give a probability of more than 75% to a reduction in key rates of 150 basis points (1.5%) from the Fed next year.