financetom
Euro-Dollar
financetom
/
Forex
/
Euro-Dollar
/
Euro up 0.70%, ECB's Knot Talks of Large Rate Hike in July
News World Market Environment Technology Personal Finance Politics Retail Business Economy Cryptocurrency Forex Stocks Market Commodities
Euro up 0.70%, ECB's Knot Talks of Large Rate Hike in July
Mar 22, 2024 2:17 AM

Above: ECB Board Member and Head of the Dutch central bank, Klaas Knot. Image © ECB.

The European Central Bank (ECB) looks increasingly likely to raise interest rates in July with one member of the Governing Council warning a surprisingly large hike could be delivered.

Dutch central bank governor Klaas Knot said in an interview Tuesday the ECB should raise its key interest rate by 25 basis points in July, but should not yet rule out a bigger increase.

Knot's comments were quoted by Dutch TV programme College Tour.

The comments shore up the prospect for a July rate hike but opening the door to anything greater than a 25 basis point hike represents a hawkish surprise from a currency perspective.

This sentiment is expressed through a stronger Euro against the Dollar: EUR/USD has risen 0.70% by the time of writing to quote at 1.0511. (Set FX rate alert here).

"The first interest rate hike is now being priced in for the monetary policy meeting of 21 July, and that seems realistic to me," Knot said.

He said the ECB should keep the door open to a bigger move if incoming data over the next few months would suggest that inflation is "broadening further or accumulating". "A bigger increase must not be excluded either... a logical next step would amount (to) half a percentage point," he said.

Knott's comments come a day after ECB Governing Council member François Villeroy de Galhau expressed concern that the Euro was too weak and was therefore contributing to inflation.

"Let me stress this: we will carefully monitor developments in the effective exchange rate, as a significant driver of imported inflation," Villeroy told a conference at the Bank of France.

The commentaries form the latest in a series of signals the ECB is preparing the market for rate hikes in response to surging inflation, a development which could underpin the Euro's outlook against the Dollar, particularly if expectations for Federal Reserve rate hikes are at a saturation point.

Comments
Welcome to financetom comments! Please keep conversations courteous and on-topic. To fosterproductive and respectful conversations, you may see comments from our Community Managers.
Sign up to post
Sort by
Show More Comments
Related Articles >
Euro Relief Short-Lived as Secular Dollar Bull-Trend has Further to Run
Euro Relief Short-Lived as Secular Dollar Bull-Trend has Further to Run
Mar 22, 2024
The euro to dollar exchange rate (EUR/USD) has powered higher bringing to end the relentless selling pressure.USD bull trend to extend in line with its longer-term secular trends - roughly eight years up and eight years down on average since the 1970s“Corrective EUR gains in the next few weeks (to...
Euro Exchange Rate Forecast to Hit Parity v US Dollar
Euro Exchange Rate Forecast to Hit Parity v US Dollar
Mar 22, 2024
The euro dollar exchange rate (EURUSD) has been pushed sharply lower amidst a tsunami of dollar buying.The euro has had a tough week and hit new lows on the back of further details concerning the European Central Bank (ECB) quantitative easing programme. This helped to buoy sterling and boost a...
DAX Surge Keeps EUR Outlook Weak as Hedging Demand Grows
DAX Surge Keeps EUR Outlook Weak as Hedging Demand Grows
Mar 22, 2024
With Eurozone stock markets powering higher we hear the outlook for the euro exchange rate complex (EUR) will continue to be undermined as investor demand for currency hedges remains elevated.“As the euro weakens further and oil prices stay subdued the case for a robust euro recovery grows stronger by the...
Japanization will See a Trillion Euros Leave the Eurozone say Deutsche Bank
Japanization will See a Trillion Euros Leave the Eurozone say Deutsche Bank
Mar 22, 2024
The outlook for the euro exchange rate complex (EUR) remains overwhelmingly negative says a new note issued by a leading Deutsche Bank analyst which forsees investor money draining out of the single-currency market.With the euro being battered across the board we continue to ask the question - just how low...
Copyright 2023-2025 - www.financetom.com All Rights Reserved