Last week, the ECB raised interest rates in the Eurozone by 0.75 percentage points. This was the highest number ever.
LONDON (AFP) – The euro strengthened against major rivals on Monday, a day after Bundesbank President Joachim Nagel suggested that the European Central Bank may raise interest rates again to combat sky-high inflation.
The European single currency went up by more than 1.4% against the dollar and 1.6% against the yen.
Last week, the ECB raised interest rates in the Eurozone by a record 0.75 percentage points and warned that inflation would stay high for a long time.
Sunday, the head of the German central bank, Nagel, gave a sign that the ECB would probably keep raising interest rates as long as inflation in the eurozone kept going up.
Related: The ECB’s hawkish stance hurts the dollar and helps the euro.
Market watchers now expect the ECB to raise rates again by a large amount in October.
“After hearing what was said, the ECB is likely to raise rates even more,” said Craig Erlam, an analyst at the trading firm OANDA.
He also said that the euro was due for a comeback after a string of big drops, including last week’s 20-year low against the dollar.
The ECB is following the US Federal Reserve’s aggressive monetary policy to deal with sky-high consumer prices by raising the cost of borrowing money.
