The euro went up as De Guindos joined the ECB chorus. The ECB is predicting a rate rise in July.
A vice president of the European Central Bank said today that the bank could raise interest rates as soon as July. The euro rose in early trading in Europe because Luis De Guindos joined a growing group of European Central Bank officials who said that.
De Guindos’ comments come on the heels of similar ones made by Joachim Nagel, Pierre Wunsch, and Martins Kazaks in the last 24 hours. All four of them are at the International Monetary Fund’s spring meeting right now.
They show that the bank has changed its message after President Christine Lagarde said last week that there was little chance of an early rate rise. They also show that the bank has changed its tone. Because Lagarde’s deputy made the comments, they have more weight.
It was at $1.0894 at 2:50 AM ET (0650 GMT), which was its highest level in a week. It had been at a 20-month low of $1.0757 after Lagarde spoke on Thursday.
There is “no reason” why the bank can’t stop buying assets in July, which would set the stage for a rise in interest rates almost immediately. That’s why he said that any rise in interest rates would be “data-dependent,” because the risks to the economy have gone up a lot because of Russia’s attack on Ukraine. The IMF cut its growth forecast for the Eurozone this year from 3.9% to 2.8% this week. This is down from 3.9%. Inflation in the eurozone is at an all-time high of 7.5 percent.De Guindos says he expects it to slow down by the end of the year.
Over the weekend, the head of the Belgian National Bank told Bloomberg that rate rises this year was likely.
“As long as there’s no bad news on that front, hiking by the end of this year to zero or slightly positive territory for me would be an easy decision.
On Wednesday, Bundesbank head Nagel said that “it looks like we’ll be able to end net purchases, maybe even at the end of the second quarter.” This would set the stage for a first rate rise “at the beginning of the third quarter.”“
