Oanda currency converter online9/10/2023 At the same time, inflation dropped to 5.5% in June, which is almost triple the ECB’s target of 2%. The eurozone economy is struggling, which would support a pause. Members noted that “monetary policy had still more ground to cover” and “the Governing Council could consider increasing interest rates beyond July, if necessary.”ĮCB policy makers will make their rate determinations based on economic data, but that doesn’t mean the decision will be clear-cut. What happens after that? The minutes of the June meeting, released earlier this month, signalled that a September hike is a strong possibility. The ECB will announce its rate decision on Thursday, and like the Fed later today, it’s a virtual certainty that the ECB will raise rates by 0.25%. We can expect Powell to stick to the well-worn mantra of basing future rate decisions on economic data, in particular inflation and the strength of the labour market. Powell does not want the markets to become complacent about inflation, and for this reason, he is unlikely to close the door on future rate hikes, even if he hints at a pause after today’s expected increase. The Fed has reiterated that although inflation is heading in the right direction, it remains too high and more work needs to be done to bring inflation back to the 2% target. The money markets remain confident that today’s rate hike will be the last in the current tightening cycle, which is a more dovish stance than what we’ve been hearing from Powell & Co. The FOMC will not be releasing any economic forecasts, which means investors will have to comb the rate statement and Jerome Powell’s follow-up press conference for clues about future rate policy. The Federal Reserve meets later today, and it’s close to a certainty that the Fed will raise rates by 0.25%, which would bring the Fed Funds rate to a range of 5.25% to 5.50%. In Wednesday’s European session, EUR/USD is trading at 1.1063, up 0.07%. The euro is showing limited movement for a second consecutive day.
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