ECB cut the rate, and EUR remained strong. Overview for 07.06.2024

The primary currency pair strengthened its position on Friday. The current EURUSD exchange rate stands at 1.0892.

At its meeting yesterday, the European Central Bank lowered the interest rate to 4.25% per annum from the previous 4.50%, with the marginal lending facility rate at 4.50% and the deposit rate at 3.75%. Interest rates had remained unchanged at the five previous meetings.

The comments indicate that inflation has reduced by 2.5% since the ECB’s September meeting, and its forecasts have improved. However, price pressures in the region’s economy remain strong as wages rise faster, and the CPI is expected to stay above the 2% target next year.

Comments about plans to keep interest rates restrictive for as long as necessary to bring inflation down to the target remained relevant.

The updated macroeconomic forecast expects 2.5% inflation in 2024 compared to the previous 2.3%, and 2.2% inflation in 2025 compared to the earlier 2.0%. GDP may rise by 0.9% this year, exceeding previous expectations.

Today, the market is conserving strength in anticipation of the release of a significant set of US employment market data, which will provide more information about the state of the country’s economy, and hence more insight into what to expect from the Federal Reserve.