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European markets were lower on Tuesday as investors assessed the interest rate outlook for 2023.

The Stoxx 600 was down 0.4% in early morning trade, with most sectors and major bourses trading in negative territory. Autos led losses, down 1.2%, while banking stocks and oil and gas bucked the trend by gaining 0.1%.

Last week, the European Central Bank raised its key interest rate from 1.5% to 2% and said it would shrink its balance sheet by about 15 billion euros ($15.9 billion) every month from March 2023 until the end of the second quarter. The ECB said interest rate hikes would have to continue “at a substantially steady pace”.

The Bank of England and the Swiss National Bank struck a similar tone, also opting for 50 basis point hikes, matching the US Federal Reserve’s decision last Wednesday. Fed Chairman Jerome Powell also signaled that the central bank’s efforts to rein in inflation are far from over, and said policymakers will “have to stay with it”.

Asia-Pacific markets traded lower, with larger Chinese markets leading losses in the region despite government pledges to stabilize the economy in 2023.

U.S. stock futures fell on Tuesday morning and reversed directions after the Bank of Japan announced it would increase its yield target.