The Paris Bourse began the session slightly higher on Tuesday morning, as the Bank of Japan's (BoJ) decision to normalize its monetary policy did not upset investors. The CAC40 index rose by 0.4% to 8180 points.

The last of the major central banks to maintain an ultra-accommodative policy, the Bank of Japan made a historic change of direction on Tuesday, turning its back on eight years of negative interest rates.

By a large majority, the BoJ Committee opted for a key rate of between 0% and 0.1%, compared with -0.1% until now, in the face of resurgent inflation and rising wage tensions in the country.

This decision was rather well received by the markets, which are aware that this symbolic measure marks the start of a period of normalization rather than the beginning of a real tightening phase.

Given the fragility of the Japanese economy, analysts expect monetary policy to remain accommodative for an extended period.

"The decision was widely expected, which explains the limited reaction of financial markets today", commented Danske Bank.

On Asian markets, the benchmark Nikkei index rallied to post a gain of over 0.6% following the announcements, returning to its all-time highs.

Since the start of the year, the Nikkei has gained almost 19%, on a par with the American "Magnificent Seven" and the great European "Granolas" (GSK, Roche, ASML, Nestlé, Novartis, Novo Nordisk, L'Oréal, LVMH, Astrazeneca, SAP and Sanofi).

Investors are now beginning to hope that the US Federal Reserve will adopt a similarly reassuring tone at the end of its two-day meeting, due to start today.

Some observers fear, however, that the US central bank is preparing minds for only two rate cuts this year, when it had previously expected three.

In view of the healthy state of the US economy, the money markets now assess a rate cut in June with a probability of only 50.7%, according to the FedWatch barometer.

In the end, a first rate cut may not take place until the third quarter, a far cry from the initial projections of investors who, at the start of the year, were hoping for a reduction in the cost of money as early as March.

Alexandre Baradez, head of market analysis at IG France, warns: "And it is perhaps this situation that could push equity markets to consolidate a little.

In Europe, market attention is focused on Germany's ZEW business climate index. Up for the eighth month in a row, the ZEW economic climate indicator for Germany gained 11.8 points between February and March 2023 to stand at 31.7 points, its highest level for 12 months.

'Economic conditions in Germany are fragile, so it will be interesting to see if things have changed in March before the PMI indices are published on Thursday', explains Danske Bank.

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