The euro fell sharply to levels that are already close to the threshold of $1.06 per euro, the lowest since March.
This happened after yesterday the Federal Reserve Board of the USA indicated that it will keep the higher interest rates for a longer time, which increased the demand for the American money, BTA reported.
In interbank trade in Frankfurt this morning, the single European currency was quoted at $1.0617.
The European Central Bank set a reference rate of the euro at 1.0702 dollars on Wednesday afternoon.
The US left its key interest rate unchanged
The US Federal Reserve Board left its key interest rate unchanged after the two-day meeting to determine the interest rate policy, reported “CNB”.
The Fed has also signaled that it will raise rates once more before the end of the year and that fewer rate cuts are likely next year.
If a new interest rate hike is undertaken by the end of this year, it will be the end of this cycle of monetary policy tightening, according to forecasts by the Federal Reserve.
At its last meeting in July, the Federal Reserve raised interest rates to their highest level in 22 years, raising the Federal Funds Rate, the target interest rate at which commercial banks in the US issue and receive overnight loans and deposits – note p. ) in the range of 5.25 – 5.50 percent.
In addition to one more hike by the end of this year, the Fed’s forecasts include two rate cuts next year. In June, the Federal Reserve predicted four rate cuts in 2024.
In a news conference after the rate decision was announced, Fed President Jerome Powell said that while price pressures are showing some encouraging signs of easing, the return of inflation to the 2 percent target is far from over.
“Inflation has moderated somewhat since the middle of last year and longer-term inflation expectations appear to remain stable, as reflected in a broad range of surveys.”Powell said.
“However, the process of sustainably reducing inflation to 2 percent has a long way to go.”he warned.
From March 2022 (when rates were raised for the first time since 2018 and when they were at around zero – note) to May 2023. The Federal Reserve has raised interest rates for 10 consecutive meetings at a rate of 0.25 to 0.75 percentage points in an effort to calm the highest US inflation since the early 1980s.
At its June meeting, the Fed paused, but quarterly economic forecasts accompanying the decision showed 12 of the board’s 18 members still expected two more quarter-point rate hikes by the end of the year. One such decision was made in July, when the US central bank raised its key interest rates by 0.25 percentage points.
Inflation in the US in August rose for the second month in a row to 3.7 percent or by 0.5 percentage points above its level in July. Still, it fell far short of the more than 40-year high of 9.1 percent that was reported in June 2022. Still, the new data remains above the target for an annual consumer price increase of 2 percent.
Last week, the European Central Bank raised its main interest rates by another 0.25 percentage points, which reached a record high level since the creation of the Eurozone. At the time, the president of the institution, Christine Lagarde, indicated that this could be one of the last rate hikes.
“The Governing Council of the European Central Bank considers that the main interest rates of the ECB have reached levels which, maintained for a sufficiently long period of time, will contribute significantly to the return of inflation to the desired level of 2 percent”Lagarde pointed out.
2023-09-21 07:25:37
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