The European Central Bank will most probably decide to halt its stimulus program within two months, according to Pablo Hernández, ECB policymaker. He also states that interest rates are also likely to be pushed up imminently.
The governor of the Central Bank of Spain has likewise joined the clamor for ECB policymakers to raise interest rates for the first time in the last ten years. The essence of this is to curb the euro’s high inflation levels and also to avert the entrenchment of increasing prices.
Increase in Interest Rates Is Set to Boost the Value of the Euro
The European Central Bank seems to be a lot behind the central banks of other countries when it comes to raising interest rates. Rather, the focus for up to a decade has been on pumping money into the economy through the Asset Purchase Program.
At a Bundesbank event, Hernández confirms that the end of the stimulus program will likely come to an end after a decision at the June meeting. He also said that following immediately is the decision to raise the rate imminently.
In April, inflation in the eurozone attained a new high of 7.5%, and even measures that exclude energy and food expenses were considerably above the ECB’s 2% objective.
The ECB’s deposit rate is now at a negative 0.5 percent, which indicates that financial institutions are paying some money to retain their cash with the bank. This has been the case since 2014.
The increase in interest rates is set to boost the value of the euro.
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