The euro rose on Thursday after the European Central Bank’s interest rate decision. The ECB is leaving the key interest rate for the euro area at zero percent, as expected, but is daring to gradually turn away from crisis mode and is letting its trillion-dollar emergency pandemic program expire. The European common currency then rose by half a US cent to $ 1.1333.
The pound sterling also stopped its recent series of losses and gained 0.7 percent to 1.3357 dollars and 0.25 percent to 1.1771 euros. The Bank of England (BoE) was the first of the world’s major central banks to raise interest rates since the outbreak of the corona pandemic. The key interest rate was surprisingly raised from 0.1 to 0.25 percent. The monetary authorities reacted to the rapid rise in prices on the island. At 5.1 percent, inflation recently surpassed the central bank’s target and was at its highest level in over ten years. Many experts had not yet expected a tighter monetary policy because of the aggravated Corona situation. The British central bank said that although the new Corona mutant will burden the economy in the short term, the medium-term effects on inflation are unclear. The BoE leadership continues to believe “that a slight tightening of monetary policy in the forecast period should be necessary in order to sustainably achieve the inflation target of two percent”.
The Fed’s optimistic statements on the US economy drove up prices on the commodity markets. The industrial metal copper increased in price by 3.3 percent to 9500 dollars per ton, while Brent crude oil cost a good one percent more at 74.33 dollars per barrel. In view of high inflation, the Fed initiated an early departure from crisis mode the day before and signaled several rate hikes for 2022.