Euro is higher today, gaining on comments from Germany’s central bank. The idea that the ECB could raise interest rates soon as a curb to inflation has some traders wondering if such a rate hike could be coming. As a result, the euro is moving higher.
Even though the European Central Bank has promised to keep interest rates low in order to help spur the eurozone economy and save the euro, the Bundesbank voiced its own concerns that keeping with a low interest rate might not be in the best interest of the economy. Bundesbank comments focused on the possibility of inflation, and says that the promise to keep rate low doesn’t necessarily rule out an interest rate hike designed to slow inflation.
If the eurozone economy does show signs of inflation, it could be a clue that things are picking up. There’s a delicate balance that central banks have to maintain between boosting economic growth and keeping inflation under control. The idea that the ECB might have to worry about inflation soon is providing a boost to the euro.
At 13:40 GMT EUR/USD is up to 1.3353 from the open at 1.3336. EUR/GBP is lower at 0.8531, down from the open at 0.8536. EUR/JPY is up to 130.7675 from the open at 130.2050.
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