Home Forex The policies of the ECB and the Fed diverge, the cancellation of the euro – MUFG

The policies of the ECB and the Fed diverge, the cancellation of the euro – MUFG

by SuperiorInvest

ECB short-term policy view was the driver of EUR volatility this week. According to economists from MUFG Bank, the euro should be supported by a different monetary envelope between the Fed and the ECB.

The ECB’s base rate will reach 3.00% by the end of this quarter.

“We stick to our forecast that the key interest rate will reach 3.00% by the end of this quarter. A scenario that is not fully reflected in the Eurozone rate market, which currently expects a total of 93 basis point hikes at the February and March policy meetings.

“We expect ECB and Fed policies to diverge early this year, with the Fed slowing growth to 25 basis points in February in response to further evidence of easing US inflation. It continues to favor a stronger euro along with an improving cyclical outlook for eurozone which is currently being priced into the markets as recession risks diminish.”

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