The world's stock markets plunged Monday as investors reacted to the European Central Bank's decision to raise interest rates.
The Dow Jones Industrial Average fell more than 1,000 points, or 3.5%, in its worst day since June 2020. The S&P 500 index fell 3.2%, and the Nasdaq Composite Index fell 4.1%.
The declines came after the ECB raised its key interest rate by 0.5 percentage points, its first increase since 2011.
The move was widely expected, but investors were spooked by the ECB's hawkish tone.
The ECB said that it would continue to raise rates "at a steady pace" in order to bring inflation back to its target of 2%.
The ECB's decision sent shockwaves through the global financial markets.
The euro fell sharply against the U.S. dollar, and stock markets around the world tumbled.
The declines were particularly pronounced in Europe, where the ECB's decision raised concerns about the region's economic outlook.
The ECB's rate hike is the latest in a series of moves by central banks around the world to combat inflation.
The Federal Reserve has raised interest rates four times this year, and the Bank of England has raised rates six times.
The Bank of Canada has also raised rates four times this year.
The rate hikes are starting to have an impact on the global economy.
The International Monetary Fund has downgraded its global growth forecast for this year and next.
The IMF now expects the global economy to grow by 3.2% this year, down from its previous forecast of 3.6%.
The IMF also expects global inflation to average 8.8% this year, up from its previous forecast of 6.6%.
The IMF's downgrade is a sign that the global economy is facing a number of challenges, including the war in Ukraine, rising energy prices, and supply chain disruptions.
The ECB's rate hike is likely to add to these challenges.
The rate hike will make it more expensive for businesses to borrow money, which could lead to slower economic growth.
The rate hike will also make it more expensive for consumers to borrow money, which could lead to a decline in consumer spending.
The ECB's rate hike is a reminder that the global economy is still facing a number of challenges.
Investors should be prepared for continued volatility in the financial markets.
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