European stocks may follow global peers lower on Thursday after the U.S. Federal Reserve took the first tentative steps to eventual normalization of its ultra-accommodative monetary policy.

After keeping interest rates steady, the Fed indicated it expects to start raising interest rates in 2023, earlier than previously forecast.

Bond yields jumped by the most since early March and the dollar boasted its strongest single day gain in 15 months, as the Fed brought forward its projections for the first post-pandemic interest rate hikes.

Meanwhile, Brazil’s central bank lifted its key interest rate by 75 basis points on Wednesday and signaled another rate hike of the same magnitude at the next meeting.

Policymakers viewed that the rate hike is necessary to mitigate the dissemination of the temporary shocks to inflation.

Asian markets fell broadly and oil prices dipped on dollar strength, while gold steadied after capping the biggest drop in five months.

It’s a quiet day ahead on the economic data front, with finalized Eurozone inflation figures for May likely to be in focus.

Across the Atlantic, weekly jobless claims and Philly FED Manufacturing numbers may sway market mood.

U.S. stocks fell overnight as the Federal Reserve raised inflation expectations and forecast rate hikes in 2023 as economic activity heats up. Eleven Fed officials forecast at least two hikes by the end of 2023, while seven officials expect a rate hike as soon as 2022.

The Dow dropped 0.8 percent, the S&P 500 shed half a percent and the tech-heavy Nasdaq Composite slipped 0.2 percent.

European stocks ended mixed on Wednesday before the release of the Fed decision. The pan European Stoxx 600 rose 0.2 percent to hit another record high.

France’s CAC 40 index and the U.K.’s FTSE 100 both edged up around 0.2 percent while the German DAX eased 0.1 percent.

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