The EUR/USD review immediately after ECB's decision on interest rates
Today, the ECB has decided to raise its three key interest rates by 75 basis points. With this third major policy rate increase in a row, the Governing Council has made considerable progress in normalizing monetary policy measures. Now the Governing Council expects further interest rate hikes to ensure the timely return of inflation to the ECB's 2% medium-term target. The future policy path will be based on the evolving inflation and economic outlooks.
Inflation remains too high and is likely to stay above the target for an extended period. In September, the inflation rate in the euro area stood at 9.9%. In recent months, skyrocketing energy and food prices, supply disruptions, and a post-pandemic recovery in demand have fueled price pressures, thus driving up inflation. The Monetary Policy of the Governing Council is aimed at dampening demand and protecting against the risk of a persistent upward shift in inflation expectations.
