fbpx

PU Prime App

Exclusive deals on mobile

  • Market Insights  >  Weekly Outlook

26 May 2022,03:28

Weekly Outlook

ECB To End 8 Years of Negative Interest Rates

26 May 2022, 03:28

Share on:
FacebookLinkedInTwitterShare
Share on:
FacebookLinkedInTwitterShare

On Wednesday morning (GMT+3), Germany released its quarter-on-quarter GDP figures. The 0.2% increase was exactly in line with forecasts, while an increase from the previous quarters -0.3%. Year-on-year growth for Q1 stands at 3.8%, up from the forecasted 3.7%.

Earlier in the week on Tuesday, European Central Bank (ECB) president Christine Lagarde gave the indication that the ECB would be aiming to lift interest rates from the current -0.5% to 0% through two 25-point hikes by the end of September.

“The next stage of normalization would need to be guided by the evolution of the medium-term inflation outlook,” Lagarde wrote in a blog post.

For the past 8 years, interest rates in the Eurozone have been negative in a grand experiment by the ECB to stimulate the European economy after the sovereign debt crisis hit. However, worldwide inflation due to a confluence of pandemic-era monetary easing and skyrocketing commodity prices from the Russia-Ukraine war has forced the ECB to rethink its ultra-loose monetary policy.

However, even as the US embraces aggressive tightening, the EU is approaching the matter with much more caution.

David Wessel, a senior fellow at the Brookings Institution, says that the ECB has a much harder job than the Fed. “The [US] has a strong economy and too much inflation. Europe — in part because of what’s going on in Ukraine — has a weak economy and too much inflation.”

Post Market

Including its most recent GDP numbers, Germany’s macroeconomic data has proved the resilience of the German economy in the face of supply-chain disruptions and rising commodity prices caused by the war in Ukraine.

The euro has been trading steady since its 0.4% jump on Tuesday on the back of expected rate hikes in the Eurozone, with the markets already starting to price in four 0.25% hikes this year, one for each meeting between July and December.

European equities also rose, with the STOXX 600 index and DAX both up 0.63%.

Meanwhile, the Dollar Index as been weakening the past two days, only rebounding on Thursday morning on news that the Fed would be shifting from a “neutral” to a “restrictive” central bank stance.

Investors are now advised to pay close attention to the upcoming US preliminary GDP and Initial Jobless Claims figures, which will both be released on Thursday, 26 May, at 15:30 (GMT+3). The data is the next major indication of how the euro will fare against the dollar.

As a friendly reminder, do keep an eye on market changes, control your positions, and manage your risk well.

Bắt đầu Giao dịch với lợi thế

Giao dịch ngoại hối, chỉ số, Kim loại,...với phí chênh lệch thấp trong ngành và khớp lệnh nhanh như chớp

  • Bắt đầu giao dịch với số tiền nạp thấp nhất là $50 cho tài khoản Standard của chúng tôi.
  • Hỗ trợ 24/7.
  • Truy cập hàng trăm công cụ, công cụ giáo dục miễn phí và một số chương trình khuyến mãi tốt nhất xung quanh.
Tham gia ngay

Latest Posts

Mở tài khoản nhanh chóng và dễ dàng

Tạo tài khoản Live
  • 1

    Đăng ký

    Đăng ký Tài khoản Live PU Prime với quy trình đơn giản của chúng tôi

  • 2

    Nạp tiền

    Dễ dàng nạp tiền vào tài khoản của bạn với nhiều kênh nạp tiền và loại tiền tệ được chấp nhận

  • 3

    Bắt đầu Giao dịch

    Truy cập hàng trăm công cụ trong điều kiện giao dịch hàng đầu thị trường