Global stocks hit a more than 20-month high after Fed chairwoman hints at possible rate rise

In Europe, a benchmark of 300 of the region’s biggest stocks has hit its highest level since December 2015, according to Reuters

The dollar on Tuesday recorded its longest consecutive streak of daily gains in months (Getty)

Stocks around the world rose to a more than 20-month high on Wednesday, according to Reuters, and the dollar climbed too, a day after US Federal Reserve Chairwoman Janet Yellen signalled that the central bank could raise interest rates as early as March.

The dollar on Tuesday recorded its longest consecutive streak of daily gains in months after Ms Yellen said that quicker rate increases than previously anticipated would be appropriate if the economy remains on track and key inflation and labour targets are met.

That spurred stocks on Wall Street to a fresh record high on Tuesday. Stock indices elsewhere around the world mirrored that rally on Wednesday.

In Europe, a benchmark of 300 of the region’s biggest stocks hit its highest level since December 2015, according to Reuters. London’s FTSE 100 climbed too.

“[Ms Yellen is] slowly starting to prepare the market for the next hike,” Arnaud Masset, a market analyst at online lender Swissquote Bank, said.

“Nevertheless, we believe that the uncertainty generated by the Trump administration, together with overestimated inflation expectations will force the Fed to proceed slowly and cautiously.”

The Fed is next scheduled to meet 14-15 March. It last raised interest rates in December and economic data since then has largely been robust.

Another driver behind the recent rally in stock markets has been President Donald Trump’s pledge to roll back regulation and reform taxes to bolster economic growth and job creation.

Last week Mr Trump said that he was on the verge of announcing the most ambitious tax reform since the Reagan-era.

He promised a “phenomenal” tax plan that will slash corporate levies, possibly encouraging global corporations to repatriate large sums of money held in offshore accounts.