ECB’s Nagel calls December rate hike obvious despite energy relief
In an interview with Bloomberg TV, Bundesbank President Joachim Nagel, also a member of the European Central Bank (ECB) Governing Council, said that “it is rather obvious that we have to increase in December,” cementing the case for a rate hike next month.
Nagel added that the drop in energy prices following the US midterm elections is good news. He stated that market expectations do not drive their decisions at the central bank, but stressed that “we’ll do what’s needed to return inflation to 2%.
Key highlights:
It is rather obvious that we have to increase in December
Drop in energy prices since US midterms is good news
Market expectations important but not driving factor
I don't see a risk of fiscal dominance
We'll do what's needed to return inflation to 2%
France must look at its fiscal challenges
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.37% | 0.49% | 0.46% | 0.38% | 0.75% | 0.48% | 0.56% | |
| EUR | -0.37% | 0.10% | 0.05% | 0.01% | 0.36% | 0.11% | 0.18% | |
| GBP | -0.49% | -0.10% | -0.06% | -0.09% | 0.26% | -0.01% | 0.08% | |
| JPY | -0.46% | -0.05% | 0.06% | -0.04% | 0.32% | 0.04% | 0.13% | |
| CAD | -0.38% | -0.01% | 0.09% | 0.04% | 0.36% | 0.08% | 0.17% | |
| AUD | -0.75% | -0.36% | -0.26% | -0.32% | -0.36% | -0.27% | -0.19% | |
| NZD | -0.48% | -0.11% | 0.01% | -0.04% | -0.08% | 0.27% | 0.09% | |
| CHF | -0.56% | -0.18% | -0.08% | -0.13% | -0.17% | 0.19% | -0.09% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
ECB FAQs
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region. The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.
Author
Christian Borjon Valencia
FXStreet
Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.
