In September, the ECB raised its official interest rate by 25 basis points, to a historical maximum of 4%, while the consensus was quite divided. Despite the rate hike, the Euro failed to register notable gains. The economists of HSBC They expect a weaker Euro in the future.
Lower Euro for longer
The statement supports our view that rates may have peaked and could remain at current levels for some time. At the press conference, ECB President Christine Lagarde refused to claim that rates had peaked, but she admitted that attention would now focus on the duration of restrictive rates. And while the ECB may try to push a “higher for longer” mantra for its rate outlook, For the Euro it seems clear to us that the path is now “lower for longer”.
A downward shift in EUR rate expectations from now on, coupled with the possibility of US rate cuts being priced into the market, makes the bearish potential for EUR/USD more convincing. The external environment also does not seem to offer much comfort to the Euro, with continued signs of slowing global growth, amid the impact of monetary tightening.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
