European Central Bank's Rate Outlook Has Minimal Impact on Euro, Report Finds

Deep News
Mar 11

According to Francesco Pesole of ING, markets may be removing expectations for European Central Bank interest rate hikes from their calculations, but this is unlikely to weaken the euro. Data from the London Stock Exchange Group indicates that rising energy prices, driven by conflict in Iran, have led markets to price in a 25-basis-point rate increase by year-end, whereas previous expectations were for rates to remain unchanged. Pesole noted that while the likelihood of a rate hike appears low, the ECB's policy expectations have very little influence on the euro. Oil prices remain the "absolute primary driver." He mentioned that reports suggesting the International Energy Agency is planning its largest-ever release of oil reserves could temporarily keep the euro above $1.60. The euro held steady at $1.1607.

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