Following the statements made by the President of the European Central Bank (ECB), Christine Lagarde, after today's monetary policy meeting, pricing began in the bond markets that the ECB will increase interest rates by 10 basis points in June.
The ECB Governing Council, at its meeting today, decided not to change interest rates. Accordingly, the policy rate was kept constant at zero, the deposit rate at minus 0.50 percent and the marginal funding rate at 0.25 percent.
The statements made by ECB President Lagarde after the meeting brought volatility in many asset prices.
Lagarde stated that inflation is getting closer to the inflation target of the ECB and that all the members of the monetary policy board are beginning to be worried about inflation.
Lagarde stated that the policy rate hike will be decided according to the incoming data, adding that they will not act hastily on the interest rate hike.
With Lagarde's statements, the ECB's 10 basis points interest rate hike started in the bond markets in June, while a total of 40 basis points interest rate hikes are expected by the end of the year.
The Bank of England (BoE), which increased its policy rate by 25 basis points at its meeting today, maintained its "hawk" stance.
Euro strengthens against dollar
With these policy steps and Lagarde's statements, selling pressure increased in stock and bond markets across Europe.
Germany's 10-year bond yield increased to 0.14 percent and France's 10-year bond yield to 0.55 percent, the highest level since March 2019.
The euro/dollar parity, which increased with Lagarde's speech, gained 1 percent and rose to 1.1399, the highest level since January 18.
The daily gain of the pound/dollar parity, which appreciated against the dollar, also approached 0.3 percent.
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