ECB raises interest rates and the Euro keeps falling

📌 On Thursday, the ECB raised interest rates for the tenth time in a row, signaling a shift in strategy toward maintaining rates high in order to keep inflation at bay. While analysts and investors currently consider this level to be the high point for borrowing costs in the current tightening cycle, the ECB president reiterated that she cannot yet say.

📌 According to the president, a « solid majority » welcomed the conclusion, while she recognized that some of her colleagues would have preferred a delay instead. Officials noted prior to the meeting that the decision was the most delicately balanced since the ECB began tightening in July 2022.

📌 The Governing Council reiterated that borrowing costs will be kept at « sufficiently restrictive levels for as long as necessary. » This might leave the door open to more raises if inflation turns out to be more stubborn than expected.

📌 On wagers that the European Central Bank would stop rising interest rates, the euro was on track for its longest losing streak since its foundation. The currency plummeted for the ninth week in a row, the longest losing streak since its inception more than two decades ago. It’s dropped 5.6% against the dollar since peaking in mid-July and is now trading near its lowest levels since March.

Source: Bloomberg