CBs refrained from changes

15 December, 2017

The European Central Bank left its interest rates unchanged, despite positive economic forecasts and the expected strong growth of the Eurozone for the period until 2020. The central bank of Europe showed caution regarding the recovery of the region's economy, signaling that the regulator is not in a hurry to follow the increase in interest rates in the Federal Reserve's wake, despite the growth of the world economy. "The incoming information shows a strong pace of economic growth and a significant improvement in the prospects for growth," said Mario Draghi, ECB president, at a press conference.

ECB economists now expect that the euro area economy will grow by 2.3% in 2018, well above the expected growth of 1.8% growth forecasted back in September.

Draghi said that interest rates "will remain at current levels for a long period of time" and confirmed the ECB's plan to continue buying government bonds and other assets until September 2018, but with a reduced monthly volume of 30 billion euros.

ECB economists also raised the inflation forecast for the next year, but it remains below the target of less than 2% in 2018 and 2019.

Like the ECB, Switzerland's central bank left its key interest rates unchanged. Since most of Switzerland's exports are intended for the euro area, the monetary policy of the Swiss regulator largely depends on what the ECB is doing. The Bank of England also left the interest rate unchanged, although the Bank policy is ahead of most European countries. British officials are concerned about the planned exit of the country from the European Union in early 2019, restraining investment and restraining the economy's ability to produce goods and services.

The Bank of England's Monetary Policy Committee said in a statement that it expects a further increase in the rate over the next three years to contain annual inflation, which in November reached 3.1%. According to statement, future price growth will be gradual and limited.

The decisions of European central banks are likely to underline the gradual divergence between the world's major central banks a decade after the global financial crisis start. While the Fed gradually increases interest rates over the past two years, the ECB is not expected to raise rates until the end of 2019.

Amid these political and fundamental news on FOREX, the European currency was trading volatile today. The main market pair Eur / Usd gained during the session to daily highs in the area of ​​Eur 1.1863, but could not hold on to the achieved levels and with the opening of the US session, the Eur / Usd pair declined to the area of ​​Eur 1.1795.


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