ECB’s Kazaks says not in a rush to make a move on monetary policy
The European Central Bank (ECB) Governing Council member Martins Kazaks said on Wednesday that the central bank has ‘luxury’ to wait on interest rate rises.
Key quotes
Uncertainty arising from the Middle East conflict is very high.
But from the data that we currently see, there is no urgency to raise interest rates just yet.
We are not in a rush.
We still have the large luxury of collecting data and forming our view.
But if necessary, we will of course move.
The impact of the Middle East conflict on the real economy is only gradually feeding through.
We can afford to monitor what happens and then take the decision when we have the broader picture.
Market reaction
At the time of writing, the EUR/USD pair is up 0.10% on the day at 1.1755.
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
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