The vice-president of the European Central Bank, Luis de Guindos, said that the bloc’s economy had proven resilient but faced a number of risks, such as tariffs, that could curb growth.
European Central Bank (ECB) board member Isabel Schnabel said on Thursday, “monetary policy cycle is coming to an end.”
European Central Bank (ECB) Governing Council member Gediminas Šimkus said on Thursday that “the ECB has arrived at neutral level of rates.”
The European Central Bank (ECB) announced on Thursday that it lowered key rates by 25 basis points (bps) following the June policy meeting, as expected.
The European Central Bank (ECB) announced on Thursday that it lowered key rates by 25 basis points (bps) following the April policy meeting, as expected. With this decision, the interest rate on the main refinancing operations, the interest rates on the marginal lending facility and the deposit facility stood at 2.4%, 2.65% and 2.25%, respectively.
On Thursday, as widely expected, the European Central Bank (ECB) reduced its key rates by 25 basis points at the March policy meeting. This move puts the main refinancing operations rate at 2.65%, while the marginal lending facility and deposit facility rates now stand at 2.90% and 2.50%, respectively.
EUR/USD stays on the back foot and extends its daily decline toward 1.1500 in the second half of the day on Friday. The US Dollar benefits from the intense flight to safety and the upbeat consumer sentiment data, weighing on the pair as markets keep a close eye on headlines surrounding the Israel-Iran conflict.
Gold preserves its bullish momentum on Friday and trades at its highest level since late April above $3,400. The yellow metal attracts safe-haven demand as tensions in the Middle East heighten following Israel's military strike against Iran.
The GBP/USD pair loses ground and trades below 1.3550, erasing Thursday's gains in the process. The renewed US Dollar strength on heightened risk aversion and better-than-expected consumer confidence reading forces the pair to stay under bearish pressure heading into the weekend.
The cryptocurrency market has been hit by a sudden wave of extreme volatility, triggering widespread declines as global markets react to tensions between Israel and Iran. Bitcoin is hovering at around $104,668 at the time of writing on Friday, following a reflex recovery from support tested at $102,513.
Fed officials to stand pat as they await further clarity. A dovish BoJ could push rate hike expectations into 2026. Deflation fuels speculation about negative SNB rates. BoE may sound more dovish after disappointing UK data.
The European Central Bank (ECB) is the central bank empowered to manage monetary policy for the Eurozone. With its beginnings in Germany in 1998, the ECB’s mandate is to maintain price stability in the Eurozone, so that the Euro’s (EUR) purchasing power is not eroded by inflation. As an entity independent of individual European Union countries and institutions, the ECB targets a year-on-year increase in consumer prices of 2% over the medium term. Another of its tasks is controlling the money supply. This involves, for instance, setting interest rates throughout the Eurozone. 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 has been the President of the ECB since November 1, 2019. Her speeches, statements and comments are an important source of volatility, especially for the Euro and the currencies traded against the European currency.
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Christine Lagarde was born in 1956 in Paris, France. Lagarde, who graduated from Paris West University Nanterre La Défense, became President of the European Central Bank (ECB) on November 1, 2019. Prior to that, she served as Chairman and Managing Director of the International Monetary Fund (IMF) 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).
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.
Prior to the rate decision:
After the rate decision:
More generally, relatively high interest rates will usually result in a stronger Euro and vice versa.
The European Central Bank’s (ECB) decision on interest rates always has an effect on the Euro (EUR).
When interest rates increase, the European Central Bank is 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 decrease, the European Central Bank floods the market with euros. This is done by 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 Euro 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.
