ECB's Šimkus: Eurozone inflation depends on EU retaliation to the US
|European Central Bank (ECB) Governing Council member Gediminas Šimkus said on Friday that “Eurozone inflation depends on EU retaliation to the US.”
ECB (European Central Bank)
ECB cuts key rates by 25 bps in April, acknowledges elevated uncertainty
LATEST ECB MEASURES TO BATTLE INFLATION
ECB's Rehn: Disinflation is on track and the growth outlook is weakening
|European Central Bank (ECB) policymaker Olli Rehn commented on the inflation and growth outlook on Friday.
ECB’s Panetta: Protectionism threatens to weaken prosperity
|European Central Bank (ECB) executive board member Fabio Panetta said on Monday that “protectionism threatens to weaken prosperity.”
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ECB LATEST NEWS
April MEETING REVIEW
Breaking: ECB lowers key rates by 25 bps in April as anticipated
|The European Central Bank (ECB) announced on Thursday that it lowered key rates by 25 basis points (bps) following the April policy meeting, as expected. With this decision, the interest rate on the main refinancing operations, the interest rates on the marginal lending facility and the deposit facility stood at 2.4%, 2.65% and 2.25%, respectively.
March MEETING REVIEW
Breaking: European Central Bank lowers its interest rates by 25 basis points
|On Thursday, as widely expected, the European Central Bank (ECB) reduced its key rates by 25 basis points at the March policy meeting. This move puts the main refinancing operations rate at 2.65%, while the marginal lending facility and deposit facility rates now stand at 2.90% and 2.50%, respectively.
January MEETING REVIEW
Breaking: ECB lowers key rates by 25 bps in January as expected
|The European Central Bank (ECB) announced on Thursday that it lowered key rates by 25 basis points (bps) following the January policy meeting, as expected. With this decision, the interest rate on the main refinancing operations, the interest rates on the marginal lending facility and the deposit facility stood at 2.9%, 3.15% and 2.75%, respectively.
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AUD/USD: Bullish outlook above 0.6460
AUD/USD made a sharp U-turn on Tuesday, rapidly leaving behind the previous day’s deep pullback and surpassing its critical 200-day SMA in the 0.6460 zone. The surpass of this key region should in turn shift the pair’s outlook to a bullish one, opening the door to the continuation of the recovery in the near term.
EUR/USD shifts its focus to 1.1200
EUR/USD quickly set aside the negative start to the week and rose markedly on Tuesday, coming in at shouting distance from the key barrier at 1.1200 the figure. The pronounced bounce came on the back of the strong resurgence of the selling pressure around the US Dollar amid trade uncertainty and lower-than-expected US CPI prints.
Gold sticks to daily gains around $3,250
Gold prices pared some of their early-week losses and hovered near $3,250 on Tuesday afternoon, supported by a cautious market tone and softer-than-expected US April CPI data, which helped XAU/USD stabilise.
CryptoPunks moves to new ownership as Node Foundation acquires IP from Yuga Labs
The Infinite Node Foundation disclosed on Tuesday that it has acquired intellectual property (IP) rights for the non-fungible token (NFT) CryptoPunks collection from Yuga Labs. Through the deal, NODE seeks to provide long-term stewardship of the CryptoPunks collection and give it mainstream recognition.
US-China trade truce only emphasizes timeless investing truths
Markets roared back to life as the US and China hit pause on their escalating trade war, with both sides emphasizing mutual respect and dignity. But it wasn’t the fine print that moved markets—it was the mood shift. Investors rushed back into risk assets, betting that the worst might be behind us.
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what is the ECB?
The European Central Bank (ECB) is the central bank empowered to manage monetary policy for the Eurozone. With its beginnings in Germany in 1998, the ECB’s mandate is to maintain price stability in the Eurozone, so that the Euro’s (EUR) purchasing power is not eroded by inflation. As an entity independent of individual European Union countries and institutions, the ECB targets a year-on-year increase in consumer prices of 2% over the medium term. Another of its tasks is controlling the money supply. This involves, for instance, setting interest rates throughout the Eurozone. The European Central Bank’s work is organized via the following decision-making bodies: the Executive Board, the Governing Council and the General Council. Christine Lagarde has been the President of the ECB since November 1, 2019. Her speeches, statements and comments are an important source of volatility, especially for the Euro and the currencies traded against the European currency.
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who is ECB's President?
Christine Lagarde was born in 1956 in Paris, France. Lagarde, who graduated from Paris West University Nanterre La Défense, became President of the European Central Bank (ECB) on November 1, 2019. Prior to that, she served as Chairman and Managing Director of the International Monetary Fund (IMF) between 2011 and 2019. Lagarde previously held various senior ministerial posts in the Government of France: she was Minister of the Economy, Finance and Industry (2007-2011), Minister of Agriculture and Fishing (2007) and Minister of Commerce (2005-2007).
How to trade the ECB interest-rate decision
The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Prior to the rate decision:
- Many traders buy the rumors and square their positions shortly after the decision is made. For instance, if the market believes that the European Central Bank (ECB) will hike interest rates, traders buy the Euro (EUR) and close the position shortly after the announcement. On the other hand, if the expectation is a rate cut, traders will short the Euro and square the position after the announcement.
After the rate decision:
- If the market’s expectations differ from the actual rate decision, there can be some excellent trading opportunities.
- If the market expects a rate hike but the European Central Bank ends up cutting rates, a short-term (1-2 hours) selling the Euro could be successful.
- If the market expects a rate cut but the ECB raises rates, a short-term long position on the Euro (1-2 hours) may be advantageous.
More generally, relatively high interest rates will usually result in a stronger Euro and vice versa.
Hike, cut or keep interest rates unchanged
The European Central Bank’s (ECB) decision on interest rates always has an effect on the Euro (EUR).
When interest rates increase, the European Central Bank is selling government securities to large financial firms. In turn, the financial organizations are paying in euros for these securities. This effectively decreases the amount of currency circulating in the economy. A decreasing supply leads to higher demand and therefore causes the value of the Euro to appreciate.
When the interest rates decrease, the European Central Bank floods the market with euros. This is done by purchasing government securities from financial organizations. In return for the securities, these banks and financial deals are paid in euros, therefore increasing the supply of euros in the economy. As supply increases, the value of the Euro depreciates.
the world interest rates table
The World Interest Rates Table reflects the current interest rates of the main countries around the world, set by their respective Central Banks. Rates typically reflect the health of individual economies, as in a perfect scenario, Central Banks tend to rise rates when the economy is growing and therefore instigate inflation.
some concepts you need to know
In practical terms, QE means that central banks create money out of nothing to buy securities, such as government bonds. This new money swells the size of bank reserves by the quantity of assets purchased and that’s why this programme is called Quantitative Easings. The money supply is intended to flood financial institutions with capital in an effort to stimulate lending and increase liquidity.
Much of the governments’ debt is held by banks in the Eurozone and the ECB wants them to give more credits. If the European Central Bank buys government bonds, their prices rise and profitability drop even more. This is a liquidity-providing operation that weakens the value of the euro. This depreciation makes European exports cheaper and competitive, and ultimately, helps in recovering. In addition, as a result of the stimulus to internal and external consumption, the ECB combats the risk of deflation, a widespread and prolonged drop in prices, as well as the high unemployment.
The long term refinancing operation (LTRO) is a cheap loan scheme for European banks that was announced by the European Central Bank towards the end of 2011 in a bid to help ease the eurozone crisis.
Round one was carried out on 21 December, when banks took €489 billion from the European Central Bank. The loans are due to be repaid within three years at a rate of 1%, and a second round will be launched on 28 February, with the results of how much money was requested due on 29 February.
As the eurozone crisis has escalated, banks have become less stable and have less money to lend. The objective of the LTRO is to boost cash flow in the market and avoid a severe credit crunch or collapse of the banking system.