The European Central Bank (ECB) raised its rates by 0.25% on Thursday, setting a new record for the deposit rate at 4%. This marks the 10th consecutive increase by the central bank. However, the euro and European bond yields have both declined in response to this move, suggesting that the ECB may be nearing the end of its policy tightening phase.
Following the announcement, financial market reactions indicated a shift in expectations about future policy actions. The euro and European bond yields both experienced a drop, implying that investors anticipate an end to the current trend of ECB policy tightening. This sentiment is echoed by analysts from J.P. Morgan Asset Management, who believe that the ECB might be done with their rate hikes for now.
The latest rate increase is part of a broader trend of monetary tightening by the ECB in response to economic conditions. However, the subsequent fall in bond yields and the euro suggests a potential change in direction for Europe’s central bank. Investors seem to be betting that this could be the last in a series of rate hikes, signaling a potential shift in ECB’s monetary policy.
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