© Reuters. The euro exceeds 1.09 dollars after the decisions of the Fed
Frankfurt (Germany), March 23 (.).- The euro exceeded 1.09 dollars, the highest for almost two months, after the Federal Reserve (Fed) raised its interest rates by a quarter of a point and said that they have done almost everything, but lost some positions on Thursday after the US economic data.
The euro was trading around 4:00 p.m. GMT at $1.0886, compared to $1.0792 in the final hours of European currency market trading the previous day.
The European Central Bank (ECB) set the reference exchange rate for the euro at $1.0879.
Weekly claims for unemployment benefits in the United States (US) fell last week by 1,000, to 191,000 claims.
New home sales in the US in February rose 1.1% from the previous month and the trade deficit narrowed in the fourth quarter more than expected from the previous quarter.
The Bank of England raised its interest rates by a quarter of a point this Thursday, to 4.25%, the highest in fifteen years after raising them eleven times since the end of 2021.
The Swiss National Bank also increased its interest rates, by half a point, to 1.5%, and Norway’s Norges Bank did so by a quarter point, to 3%, the highest since 2009, saying that in May You can increase them further.
The Fed on Wednesday raised its interest rates by a quarter point to between 4.75 and 5%.
At the same time in the Governing Council of the ECB, opinions differ on what to do in the euro area, where interest rates are at 3.5%.
The governor of the De Nederlandsche Bank of the Netherlands, Klaas Knot, considered that in May it will be necessary to further raise interest rates in the euro zone, although he did not say to what extent.
Also in favor of further increasing the price of money in the euro zone was the Governor of the Bank of Estonia, Madis Muller.
But Bank of Greece Governor Yannis Stournaras is of the opinion that the ECB should be more careful due to risks to financial stability.
Nomura analysts expect eurozone average inflation to fall sharply to 7.1% yoy in February (1.3 points less than in January), but core inflation to rise to 6% yoy.
They note that “core inflation is likely to rise further due to strong labor market pressures, continued supply chain tensions, survey evidence of further upward inflationary pressures, and base effects.”
As a result, core inflation will continue to be a concern for the ECB, despite recent financial instability, and Nomura forecasts two additional 50 basis point hikes at the May and June meetings and an additional 25 basis points at the July meeting to reach a terminal rate of 4.25%.
The single currency was exchanged in a fluctuation band between 1.0867 and 1.0927 dollars.