ECB President Lagarde is up for a speech and can entertain EUR/GBP traders. Though, major attention will be given to this week’s UK inflation data and the BoE monetary policy meeting details for clear directions.
Economists at Goldman Sachs said in a note on Friday that they now expect the European Central Bank (ECB) to raise interest rates by 25 basis points (bps) in May vs. the prior estimate of 50 bps, pushing the terminal rate to 3.50% from 3.75%.
European Central Bank (ECB) Governing Council member Madis Muller is making some comments on the global banking crisis, in his appearance on Friday.
European Central Bank (ECB) Governing Council Gediminas Šimkus said on Friday, “the terminal rate hasn't been reached yet.” “I still believe that yesterday was not the last rate hike,” he added.
"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.
Another one, and then done? That is the impression that European Central Bank President Christine Lagarde has given, probably not intentionally. The Frankfurt-based institution "intends" to raise rates by 50 bps in March and then evaluate.
ECB announced on Thursday that it raised its key rates by 50 basis points (bps) following the February 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%, 3.25% and 2.5%, respectively.
The ECB has promised to continue raising significantly – and that word is, significant. It came after rates already rose by 2.5% and as the bank forecasts a mere 0.5% growth for next year, a weak level which is a downgrade from an already poor 0.9% projection. They are saying recession in all but name.
The European Central Bank (ECB) announced on Thursday that it raised its key rates by 50 basis points (bps) following the December 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 2.5%, 2.75% and 2% respectively.
The ECB has raised rates but has also subtly signaled the pace would slow. Saying a recession is more likely marks an acknowledgment of reality. Worries of a sharp fall in forward-looking surveys add to downside pressure on the euro. Ending forward guidance creates an uncertain environment that markets dislike. The ECB will not squeeze its balance sheet anytime soon.
The European Central Bank (ECB) announced on Thursday that it raised its key rates by 75 basis points (bps) following the October 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 2%, 2.25% and 1.5% respectively.
Great effort – I can hear market participants saying while clapping their hands. The European Central Bank has done its best to sound hawkish, lower inflation also by keeping the euro afloat. The effort is there, but the outcome is in doubt.
The ECB announced on Thursday that it raised its key rates by 75 basis points (bps) following the September 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 1.25%, 1.5% and 0.75% respectively.
EUR/USD has managed to stay in positive territory above 1.0700 despite having retreated modestly in the early American session. ECB President Lagarde reiterated that inflation in the Eurozone is projected to remain too high for too long, helping the Euro keep its footing.
Gold price has turned south and dropped below $1,980 after having rallied to a fresh multi-month high of $2,010 earlier in the day. The 10-year US Treasury bond yield has turned positive on the day near 3.5% following the sharp decline seen in the European session and weighed on XAU/USD.
GBP/USD has gathered bullish momentum and advanced to its highest level since mid-February above 1.2250 on Monday. The US Dollar struggles to find demand following a mixed opening in Wall Street and allows the pair to cling to its daily gains.
Bitcoin (BTC) price is rallying in a full recovery story after a harsh and long crypto winter through most of 2022. It looks inevitable that BTC will soon take out $30,000 and march higher.
CS is no more. Over the weekend the Swiss National Bank organized a buyout of the struggling bank by the only other Swiss lending giant – UBS.
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.
