European markets are likely to retreat on Friday as the prospect of long-term higher interest rates emerges following several central bank decisions this week.

Global stock markets have experienced a tumultuous week, with the pan-European Stoxx 600 falling by 1.3 percent.

The U.S. Federal Reserve, on Tuesday, left interest rates unchanged but signaled that further increases are on the horizon later this year and that rates are likely to remain elevated for an extended period as the central bank seeks to exert sustained pressure on inflation.

Federal Reserve Chair Jerome Powell reiterated that the highest priority is to restore price stability and ensure that inflation does not resurface.

On Thursday, both the Bank of England and the Swiss National Bank decided to end their series of rate hikes, although both emphasized there’s no room for complacency and that further increases and persistently higher rates are on the table. Both the Swedish and Norwegian central banks raised interest rates.

The Bank of Japan, on Friday, left interest rates unchanged at -0.1 percent and maintained its yield curve control policy, signaling no imminent impulse to unwind its massive stimulus measures for the economy.

Stocks in the Asia-Pacific region were mixed on Friday, rebounding from earlier losses, while futures for U.S. stocks indicated a slightly higher open later in the day to close out what has been a challenging week for major Wall Street indices.

Data reports in Europe on Friday include retail sales for August and purchasing managers’ indexes for September in the UK.

Source: CNBC.com