The Paris Bourse opened the session lower on Thursday, following in the footsteps of Wall Street and Asian markets, as investors were perplexed by the latest announcements from the US Federal Reserve. The CAC40 index lost nearly 1.1% at 7254 points.

Last night, the Fed ended months of suspense by keeping its main key rates unchanged, a decision that had been widely anticipated by the market.

Some commentators were quick to consider that the upward cycle was over when Fed Chairman Jerome Powell announced a revision of the institution's inflation forecast to 2.6% from 3.7% in 2024, and then spoke of keeping rates above 5% by the end of 2024.

Above all, however, investors noted that the head of the US central bank expressed confidence in the strength of the US economy, thereby dampening hopes of rate cuts next year.

Fed officials' revised projections for interest rates continue to point to another rate hike in 2024, and the Fed now seems to be betting on a 'soft landing' for the economy", point out Commerzbank analysts.

"The fact that growth has been stronger than expected justifies higher rates for longer", adds Bastien Drut, head of strategy and economic research at CPR AM.

This last element pushed Wall Street indices down and bond yields up, as many investors were hoping for a more accommodating message, which had enabled stock market indices to rebound in recent days.

As a result of this nuanced communication exercise, traders estimate the probability of the Fed raising rates again at the end of its November meeting at around 33%, according to the CME Group's FedWatch barometer.

On the bond front, the US ten-year is rallying towards a new high of 4.3950%, which means it is heading towards 4.50% according to specialists.

In reaction to the Fed's announcements, the Nikkei index on the Tokyo Stock Exchange ended the day at its lowest level, down nearly 1.4%, while the CSI 300 index of large-cap stocks in mainland China lost 0.7%.

In the afternoon, the market will take note of a series of US statistics, including the Philadelphia Fed index, jobless claims and leading indicators from the Conference Board.

At lunchtime, the Bank of England (BoE) is expected to decide on a further increase in the cost of borrowing, at the risk of dragging the British economy into recession.

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