EUR/USD
ECB raised its main rate by +0.25% to 4.00%.
At the same time, the ECB said that inflation is decreasing, but it is expected to remain too high for too long. The Governing Council is determined to ensure a timely return of inflation to its medium-term target of 2%. Therefore, today it decided to raise three key ECB interest rates by 25 basis points.
Today's rate hike reflects the Governing Council's updated assessment of the inflation forecast, the dynamics of core inflation and the strength of monetary policy impact. According to June macroeconomic forecasts, Eurosystem staff expect overall inflation to average 5.4% in 2023, 3.0% in 2024 and 2.2% in 2025. Indicators of underlying price pressure remain strong, although some show preliminary signs of easing.
We expect EUR/USD to rise towards 1.1100.