(Bloomberg) — European stocks rose after the US reported slower-than-estimated inflation, encouraging traders that the Federal Reserve is likely to lower interest rates later this year, just hours before the central bank provides updated rate projections.
The Stoxx Europe 600 Index gained 1.1% at the close in London. Rate-sensitive real estate and technology led gains. Equities rallied after a key measure of underlying US inflation cooled down for a second month in May, a pleasant surprise for Fed officials looking for signs that they can start to lower interest rates.
“This fall provides evidence that monetary policy is having its intended effect,” said Richard Flynn, managing director at Charles Schwab UK. “If inflation drops consistently in the coming months, central bankers should be convinced to finally reduce interest rates. For the Fed, today’s numbers reflect progress, but not yet success.”
The policy-setting…
