Markets await the monetary policy meeting of the European Central Bank on Thursday, June 15, 2023, amid expectations of raising interest rates for the eighth time in a row, to reach the range of 4.0%. Although Europe’s economy entered a recession during the first quarter of this year, it is expected that this increase will not be the last, according to the statements of the members of the European Central Bank.
These members stressed the need to continue raising interest rates and maintaining these levels for a long time to curb inflation. Inflation, which fell to 6.1% in May, is still far from the ECB target. They stressed that the core inflation rate will determine the final interest rate that the European Central Bank will be satisfied with during the coming period.
The interest announcement will be followed by the ECB press conference to discuss the factors that led to interest rates reaching these levels, in addition to discussing some other monetary policy decisions such as the future economic outlook. Analysts expect that any strong hints about further tightening monetary policy in the coming period may provide positive support for the euro in the currency markets.
As for the Bank of Japan, it is expected to keep interest rates at current levels of -0.10% at its meeting on Friday, and to maintain the current monetary easing policy. According to previous official statements, the Bank of Japan’s expectations regarding the inflation rate are still low due to the economy continuing to record zero and negative inflation levels for long periods, indicating that the current inflation data and the bank’s expectations for inflation trends are on the rise, and that the exit from the monetary easing policy will depend on economic and financial developments during the coming period.
Traders should remember that markets have different ideas and convictions in the way they interpret the information issued, and therefore prices cannot move 100% according to that information.
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