The price of the euro also recovered against the dollar the day before the European Central Bank approved the 0.25 and even 0.5 point rate hike
If the European Central Bank (ECB) board of directors has just a few hours to decide what to do with eurozone interest rates, investors are still not so sure they will be surprised by the price of money in the current 0%; but what will be the caliber of the rise. Because more and more experts are pointing out that Frankfurt could increase the rates by 0.5 points compared to the 0.25 points that have been settled so far.
The turning point of this change of opinion came this Tuesday with the release of inflation data for the euro-zone. Prices rose 8.6% yoy in June, a very high benchmark against which action can only be taken with interest rate hikes. The bigger, the “better” for monetary policy, but worse for an economy that could be dragged into recession if the ECB acts too forcefully.
Amid this tightrope – the divisions within the ECB are complete in this regard – markets are beginning to move quickly. Both the Euribor and the euro are improving this Wednesday. And they are doing so violently, anticipating a higher rate hike than initially expected.
In the case of the Euribor, the main index used as a mortgage reference has risen to 1.16%, the highest level since July 2012. It continues the rise that started last March, at the start of the Russian invasion of Ukraine, which led to the anticipation of high inflation and, consequently, a faster-than-expected tightening of the monetary policy of the main central banks.
This escalation meant that in April, the index on which the majority of bonds in their variable rate modality are referenced entered positive territory in its monthly average, reaching 1% of its daily rate in mid-June, if closed well at 0.852%. However, since last Friday, the Euribor has again crossed the 1% level, reaching the 1.164% it marked today. At the moment, the monthly average is 0.959%. If it closed like this, it would be the biggest record since July 2012.
For its part, the price of the euro against the dollar was placed at 1,024 greenbacks, representing a 2% increase from Tuesday’s close. Last week, both currencies reached parity after the community currency fell to 20% over the past year.
Source: La Verdad
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
