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Global stocks fell after a broad group of central banks raised interest rates and warned of further hikes in a battle to tame inflation.

The benchmark S&P 500 index fell 2.5 percent on Thursday, its biggest daily loss since early November, after dovish warnings on interest rates from central banks in the United States, Britain, Europe and Switzerland over the past day. The tech Nasdaq Composite fell 3.2 percent, also its biggest loss since November. In Europe, the broad Stoxx 600 fell 2.8 percent, its biggest loss since May.

The US Federal Reserve, the European Central Bank and the Bank of England slowed the pace of rate hikes this week, opting for a 0.5 percentage point hike. But investors were rattled by the dour tone of the meetings, particularly the ECB’s comments that “inflation remains too high” and that interest rates would continue to rise by 0.5 percentage points “for some time”.

A line chart of the Stoxx Europe 600 index shows European stocks falling as investors heed warnings from central bankers.

The Fed ended a streak of four consecutive 0.75 percentage point hikes on Wednesday, pushing the federal funds rate to a range of 4.25 percent to 4.5 percent. However, Fed Chairman Jay Powell said: “Substantially more evidence will be needed to give confidence that inflation is on a sustained downward path.”

The Fed also released its quarterly projections of where interest rates, inflation, unemployment and GDP will be in the coming years. The central bank currently expects interest rates to reach 5.1 percent at the end of 2023, suggesting the Fed will keep rates high even if the risk of a recession increases.

The Fed’s gloomy outlook and slowing interest rate hikes have caused some disappointment. “Either you think your policy position is ‘not restrictive enough’ or you think it’s close enough that [0.25 percentage point] Growth is on the table for February,” said Steve Blitz, chief US economist at TS Lombard. “You can’t believe both.”

Seema Shah, chief global strategist at Principal Asset Management, said the market “still doesn’t seem to buy into the idea that the Fed isn’t going to cut rates until 2023. [Powell’s] messages that don’t quite resonate.”

Economic sentiment was further dented by weak economic data, adding to fears of an impending recession. The US Commerce Department reported a 0.6 percent month-on-month drop in retail sales in November, the biggest drop in 11 months. The decline was more than economists polled by Reuters had forecast for 0.1 percent. US industrial production decreased by 0.2 percent in November.

Both sets of data show that the US economy has “lost some serious momentum as consumer resilience to much higher interest rates begins to crumble,” said Andrew Hunter, senior US economist at Capital Economics.

Other data showed 211,000 Americans filed for unemployment benefits last week. That was less than the previous seven-day period and lower than economists’ forecasts, a sign that a tight domestic labor market could keep inflation high for longer.

The FTSE 100 fell 0.9 percent as the BoE raised its interest rate to 3.5 percent while warning that further rate hikes were likely. Sterling fell 1.9 percent to $1.22 against the dollar, off a six-month high.

The euro traded 0.4 percent lower at $1.06 against the dollar, erasing earlier gains.

The yield on Germany’s two-year government bond, which moves on interest rate expectations, rose to its highest level since 2008, up 0.05 percentage point to 2.42 percent.

The 10-year Treasury yield, which is driven by growth and inflation expectations, fell 0.06 percentage point to 3.45 percent. The two-year Treasury yield decreased by 0.01 percentage point to 4.24 percent.

Asian markets followed U.S. stocks lower, with Hong Kong’s Hang Seng index down 1.6 percent and Japan’s Topix losing 0.2 percent, while China’s CSI 300 traded flat.