Looking at the evolution of the euro exchange rate in the global market, the EUR/USD index is currently at 1.0904, flat compared to the previous session. The euro is flat today. Economists continue to expect the
European Central Bank (ECB) to keep rates unchanged at the end of next month, ignoring recent signs that inflationary pressures are easing.
Specifically, Bloomberg research shows the deposit rate will rise from 3.75% to 4% in September. At the same time, ECB officials will begin cutting borrowing costs in March, a month earlier than expected. The findings come as the world's major central banks consider ending a cycle of rate hikes that has lasted more than a year. ECB President Christine Lagarde said the Sept. 13-14 meeting would be the time to decide whether to raise rates for the 10th straight time or pause.
Since its last meeting, the ECB has hinted that core inflation may have peaked. Moreover, another consumer survey showed that inflation expectations have eased across the euro area, but are still above the 2% target.
In addition to inflation, warnings of weakness in the European economy have also increased. ECB Governor Fabio Panetta called for caution in "adjusting the monetary policy stance in a way that does not unnecessarily impede economic activity if it wants to achieve its inflation target without impeding economic activity."
The euro zone has so far avoided a recession, but its largest member Germany experienced a winter recession and stagnation in the second quarter. Economists expect the German economy to continue to lose momentum in the third quarter, with production contracting by 0.3% in 2023. Germany's 2024 economic growth forecast also fell to -0.8% from 1%.
European Central Bank (ECB) to keep rates unchanged at the end of next month, ignoring recent signs that inflationary pressures are easing.
Specifically, Bloomberg research shows the deposit rate will rise from 3.75% to 4% in September. At the same time, ECB officials will begin cutting borrowing costs in March, a month earlier than expected. The findings come as the world's major central banks consider ending a cycle of rate hikes that has lasted more than a year. ECB President Christine Lagarde said the Sept. 13-14 meeting would be the time to decide whether to raise rates for the 10th straight time or pause.
Since its last meeting, the ECB has hinted that core inflation may have peaked. Moreover, another consumer survey showed that inflation expectations have eased across the euro area, but are still above the 2% target.
In addition to inflation, warnings of weakness in the European economy have also increased. ECB Governor Fabio Panetta called for caution in "adjusting the monetary policy stance in a way that does not unnecessarily impede economic activity if it wants to achieve its inflation target without impeding economic activity."
The euro zone has so far avoided a recession, but its largest member Germany experienced a winter recession and stagnation in the second quarter. Economists expect the German economy to continue to lose momentum in the third quarter, with production contracting by 0.3% in 2023. Germany's 2024 economic growth forecast also fell to -0.8% from 1%.
