You’ve probably heard about the European Central Bank meeting schedule, but how do you make sense of it in trading? The meetings determine the monetary policy for the eurozone and can have a big impact on currency pairs. Here’s what you need to know about the ECB meetings and their influence on the markets.
The ECB publishes its decision on interest rates after its monetary policy meeting. The ECB President speaks to the press to explain its reasoning for the decision. The ECB’s decision affects currency pairs around the world and can either boost or decrease the price of a currency. The interest rate decision of the ECB is one of the most important factors in the currency market, and the announcement of an interest rate hike or cut can affect the value of a currency pair.
The ECB can change interest rates in the eurozone to increase or decrease the value of a currency. They can raise or lower rates to support or discourage economic growth. By raising interest rates, they may attempt to curb demand for loans and tame inflation. So, how do ECB meetings affect currency pairs?
The president of the European Central Bank and its deputy, Mario Draghi, are the two people who decide the eurozone’s monetary policy. Mario Draghi, an Italian, took over the ECB in November 2011. His first major move was to reverse the interest rate hike implemented by his predecessor, Trichet, and lower the ECB benchmark rate from 1.5 percent to 1.25 percent, starting a long slide to 0 percent. Inflation expectations are a dangerous development. Consumers expect higher prices, and this spiraling inflation is very dangerous.
During the eurozone’s financial crisis, Italy and France faced similar challenges. Italy’s government debt was over 120 percent of GDP in 2019 and was expected to reach 150 percent. This made Italy’s budget deficit larger than allowed under EU rules. Despite the weak economic conditions in Italy, many observers expect Lagarde to follow Mario Draghi’s footsteps. Both men believe the ECB must do more to protect the euro. The ecb meeting schedule also affects earnings season and interest rate hikes.
The second half of the earnings season is quickly approaching, and so will the ECB’s June meeting schedule. There are more than 80 companies reporting their results during the quarter. The ECB is expected to discuss its rate-hiking plans for the coming months, as other central banks are already doing so to combat inflation.
In the United States, the FOMC is expected to continue raising rates in September, but the timing and pace of increases in the U.S. are more uncertain. Officials at other central banks have sped up their timelines to normalize rates, and they believe aggressive economic support withdrawals will reduce inflation. But the pace of interest rate hikes depends on how much inflation is in the country. If it’s too high, interest rates could rise faster.
A group of ECB policymakers has voiced their support for a 25-bps rate hike in July. While there is a strong consensus on the need to boost interest rates, some members say they will prefer to hike rates even more. In the past, some ECB members have expressed their preference for bigger rate hikes at July’s meeting.
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