• Market Insights  >  Weekly Outlook

26 May 2022,03:28

Weekly Outlook

ECB To End 8 Years of Negative Interest Rates

26 May 2022, 03:28

Share on:
Share on:

On Wednesday morning (GMT+3), Germany released its quarter-on-quarter GDP figures. The 0.2% increase was exactly in line with forecasts, while an increase from the previous quarters -0.3%. Year-on-year growth for Q1 stands at 3.8%, up from the forecasted 3.7%.

Earlier in the week on Tuesday, European Central Bank (ECB) president Christine Lagarde gave the indication that the ECB would be aiming to lift interest rates from the current -0.5% to 0% through two 25-point hikes by the end of September.

“The next stage of normalization would need to be guided by the evolution of the medium-term inflation outlook,” Lagarde wrote in a blog post.

For the past 8 years, interest rates in the Eurozone have been negative in a grand experiment by the ECB to stimulate the European economy after the sovereign debt crisis hit. However, worldwide inflation due to a confluence of pandemic-era monetary easing and skyrocketing commodity prices from the Russia-Ukraine war has forced the ECB to rethink its ultra-loose monetary policy.

However, even as the US embraces aggressive tightening, the EU is approaching the matter with much more caution.

David Wessel, a senior fellow at the Brookings Institution, says that the ECB has a much harder job than the Fed. “The [US] has a strong economy and too much inflation. Europe — in part because of what’s going on in Ukraine — has a weak economy and too much inflation.”

Post Market

Including its most recent GDP numbers, Germany’s macroeconomic data has proved the resilience of the German economy in the face of supply-chain disruptions and rising commodity prices caused by the war in Ukraine.

The euro has been trading steady since its 0.4% jump on Tuesday on the back of expected rate hikes in the Eurozone, with the markets already starting to price in four 0.25% hikes this year, one for each meeting between July and December.

European equities also rose, with the STOXX 600 index and DAX both up 0.63%.

Meanwhile, the Dollar Index as been weakening the past two days, only rebounding on Thursday morning on news that the Fed would be shifting from a “neutral” to a “restrictive” central bank stance.

Investors are now advised to pay close attention to the upcoming US preliminary GDP and Initial Jobless Claims figures, which will both be released on Thursday, 26 May, at 15:30 (GMT+3). The data is the next major indication of how the euro will fare against the dollar.

As a friendly reminder, do keep an eye on market changes, control your positions, and manage your risk well.

Comience a operar con una ventaja

Opere en forex, índices, Rieles y mucho más con los diferenciales más bajos de la industria y ejecución ultrarrápida.

  • Empiece a operar con depósitos desde tan solo 50 $ en nuestras cuentas estándar.
  • Obtenga acceso a atención al cliente 24/7.
  • Acceda a cientos de instrumentos, herramientas educativas gratis y algunas de las mejores promociones del sector.
Únase ahora

Latest Posts

Apertura de cuenta rápida y sencilla

Crear una cuenta en vivo
  • 1


    Regístrese para obtener una cuenta en vivo de PU Prime con nuestro sencillo proceso.

  • 2


    Deposite fondos en su cuenta sin esfuerzo con una amplia selección de canales y monedas aceptadas.

  • 3

    Empezar a operar

    Acceda a cientos de instrumentos en condiciones de trading líderes en el mercado.

Please note the Website is intended for individuals residing in jurisdictions where accessing the Website is permitted by law.

Please note that PU Prime and its affiliated entities are neither established nor operating in your home jurisdiction.

By clicking the "Acknowledge" button, you confirm that you are entering this website solely based on your initiative and not as a result of any specific marketing outreach. You wish to obtain information from this website which is provided on reverse solicitation in accordance with the laws of your home jurisdiction.

Thank You for Your Acknowledgement!

Dear Valued Client,

To ensure the continued performance, reliability, and security of our systems, PU Prime will upgrade its system on:

  • Client Portal / IB Portal: 23rd September 2023 between 03:00 AM (GMT+3) to 3:00 PM (GMT+3).
  • PU Prime Applications: 23rd September 2023 03:00 AM (GMT+3) until 24th September 2023 03:00 AM (GMT+3).

Access to our Client Portal, IB Portal and PU Prime Application will not be available during the period of system upgrade.

For detailed information regarding the system, please refer here.