In Asian trading on Friday (May 5), the latest price of EUR/USD was 1.1019, and the opening price was 1.1013. European Central Bank President Christine Lagarde said on Thursday that board members agreed that inflation remained too high and interest rates needed to be raised.
Economist Ulrich Kater said the ECB is nearing the end of its rate hikes and expects one or two more rate hikes. Jörg Krämer, chief economist at Commerzbank, also expects rate hikes in the euro zone to end in the summer. And that ultimately wasn’t enough to bring inflation down to 2% permanently. Significant upside risks remain to the inflation outlook. With corporate profit margins still high, the recently negotiated wage agreement increases the risk of inflation rising in the medium term. At the same time, renewed tension in financial markets and a marked tightening of bank lending could also lead to a faster-than-expected decline in inflation over the medium term.
