ECB's Schnabel: Rise in inflation expectations is a welcome development
|ECB Governing Council Member Isabel Schnabel said that the rise in inflation expectations is a welcome development on Wednesday, according to Reuters. The ECB is carefully monitoring German wage developments, she added, noting that union demands are relatively high but actual outcomes are likely to be much lower.
Schnabel added that continuing to buy bonds, even at a low level, could signal to markets that a rate hike is not imminent. Perhaps this is a lesson learned by observing the Fed's struggles to convince markets that the ending of its QE taper does not mean the start of rate hikes.
For reference, Eurozone 5-year 5-year forward inflation swaps (i.e. inflation expectations for the five years starting in five years time) rose back above 2.0% on Wednesday for the first time since late October, boosted by rising European gas prices.
Market Reaction
EUR/USD continues to struggle and is trading just above 1.1300, not far above annual lows in the 1.1260s.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.