"The current, unusual contraction in monetary aggregates is unlikely to foreshadow a deep recession but rather reflects a significant rebalancing of portfolios after a long period of low interest rates," European Central Bank (ECB) Governing Council member Isabelle Schnabel said on Monday. "Hence, there is not yet an all-clear for the inflation problem," she added.
European Central Bank (ECB) board member Frank Elderson said in an interview with Market News International on Wednesday, interest rates could still go higher, if necessary.
ECB policymaker Madis Muller said on Tuesday, “as things stand, not expecting any more rate hikes.” On Friday, Muller said that “higher inflation could yet warrant another hike.”
That's all, folks – that is the message markets have understood, overshadowing the fact that interest rates have risen once again. The ECB has raised rates by 25 bps in its September decision but made two significant moves that are weighing on the Euro.
The European Central Bank announced that it raised key rates by 25 basis points (bps) following the September policy meeting. The interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be increased to 4.50%, 4.75% and 4.00% respectively, with effect from 20 September 2023.
The ECB announced that it raised key rates by 25bps following the July policy meeting, as widely expected. With this decision, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be increased to 4.25%, 4.5% and 3.75%, respectively.
Hawks are everywhere – with the last ones spotted in Frankfurt. Each central bank is taking turns in conveying a tough message against inflation, and it is the Euro's turn to benefit. The European Central Bank has not only raised interest rates – while the Fed paused – but also included three hawkish moves. These promise further Euro gains.
The ECB announced on Thursday that it raised key rates by 25 bps following the June policy meeting, as expected. The interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be increased to 4%, 4.25% and 3.5%, respectively. According to revised macroeconomic projections, Eurosystem staff expect headline inflation to average 5.4% in 2023, 3.0% in 2024 and 2.2% in 2025.
Doves are licking their wounds – contrary to previous decisions, they have ceded little ground in return for a slower pace of rate hikes. The "sufficiently restrictive rates" language in the European Central Bank's statement has the Euro higher. The Euro is down and for good reasons. But then came ECB President Christine Lagarde who made explicit comments.
The European Central Bank (ECB) announced on Thursday that it raised its key rates by 25 basis points (bps) following the May policy meeting, as expected. With this decision, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be increased to 3.75%, 4% and 3.25%, respectively.
"There is always more than one cockroach" – this adage about banking crises is spooking markets, but the European Central Bank (ECB). The Frankfurt-based institution has expressed confidence in its insecticide and investors are buying it – at least for now. The common currency looks bullish.
The European Central Bank (ECB) announced on Thursday that it raised its key rates by 50 basis points (bps) following the March policy meeting, as expected. With this decision, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be increased to 3.5%, 3.75% and 3%, respectively.
EUR/USD lost its recovery momentum and declined below 1.0600 in the American session on Friday, erasing a portion of its daily gains in the process. Nevertheless, the risk-positive market atmosphere after PCE inflation data helps the pair limit its losses.
GBP/USD reversed its direction and slumped below 1.2200 in the American session on Friday after rising above 1.2270 earlier in the day. Position readjustments and profit-taking on the last trading day of the quarter seems to be weighing on Pound Sterling.
Following a steady rebound toward $1,880 on Friday, Gold price made a sharp U-turn and turned negative on the day near $1,860. Although the 10-year US T-bond yield is down more than 1%, XAU/USD struggles to find demand on the last day of Q3.
Polkadot price, in nearly two years, has shed 92.91% from its all-time high of $55.09. The massive downswing in DOT has pushed it down to levels that were last seen in October 2020. Hence, the chances of this altcoin forming a bottom and rallying are high.
Nike (NKE) stock has surged over 9% in Friday’s premarket, climbing above $98 per share, following late Thursday’s fiscal first-quarter earnings release. Nike beat pessimistic earnings expectations by more than 23% and hiked its dividend by 9%.
The European Central Bank is the central bank empowered to manage monetary policy for the Eurozone. With its beginnings in Germany 1998, the ECB is empowered to maintain price stability in the euro area, so that the euro’s purchasing power is not eroded by inflation. As an entity independent of individual EU countries and EU institutions, the ECB aims to ensure that the year-on-year increase in consumer prices is less than, but close to 2% over the medium term. Another of its tasks is the one of controlling the money supply. This involves, for example, setting interest rates throughout the euro area. The European Central Bank’s work is organized via the following decision-making bodies: the Executive Board, the Governing Council and the General Council. Christine Lagarde is the President of this organism since November 1st 2019. Her speeches, statements and declarations are an important source of volatility, especially for the Euro and the currencies traded against the European currency.
The Official Website, on Twitter and YouTube
Christine Lagarde was born in 1956 in Paris, France. Graduated from Paris West University Nanterre La Défense and became President of the European Central Bank in November 1st 2019. Prior to that, she served as Chairman and Managing Director of the International Monetary Fund between 2011 and 2019. Lagarde previously held various senior ministerial posts in the Government of France: she was Minister of the Economy, Finance and Industry (2007–2011), Minister of Agriculture and Fishing (2007) and Minister of Commerce (2005–2007).
Prior to the Rate Decision:
After the Rate Decision:
The decision always has an effect on the Euro.
When the interest rate is increased the European Central Bank is literally selling government securities to large financial firms. In turn, the financial organizations are paying in Euros for these securities. This effectively decreases the amount of currency circulating in the economy. A decreasing supply leads to higher demand, and therefore causes the value of the Euro to appreciate.
When the interest rates are decreased, the European Central Bank floods the market with Euros. This is done by the purchasing government securities from financial organizations. In return for the securities, these banks and financial deals are paid in Euros, therefore increasing the supply of Euros in the economy. As supply increases, the value of the Euros depreciates.
The World Interest Rates Table reflects the current interest rates of the main countries around the world, set by their respective Central Banks. Rates typically reflect the health of individual economies, as in a perfect scenario, Central Banks tend to rise rates when the economy is growing and therefore instigate inflation.
In practical terms, QE means that central banks create money out of nothing to buy securities, such as government bonds. This new money swells the size of bank reserves by the quantity of assets purchased and that’s why this programme is called Quantitative Easings. The money supply is intended to flood financial institutions with capital in an effort to stimulate lending and increase liquidity.
Much of the governments’ debt is held by banks in the Eurozone and the ECB wants them to give more credits. If the European Central Bank buys government bonds, their prices rise and profitability drop even more. This is a liquidity-providing operation that weakens the value of the euro. This depreciation makes European exports cheaper and competitive, and ultimately, helps in recovering. In addition, as a result of the stimulus to internal and external consumption, the ECB combats the risk of deflation, a widespread and prolonged drop in prices, as well as the high unemployment.
The long term refinancing operation (LTRO) is a cheap loan scheme for European banks that was announced by the European Central Bank towards the end of 2011 in a bid to help ease the eurozone crisis.
Round one was carried out on 21 December, when banks took €489 billion from the European Central Bank. The loans are due to be repaid within three years at a rate of 1%, and a second round will be launched on 28 February, with the results of how much money was requested due on 29 February.
As the eurozone crisis has escalated, banks have become less stable and have less money to lend. The objective of the LTRO is to boost cash flow in the market and avoid a severe credit crunch or collapse of the banking system.
