“The ECB has not yet finished with this cycle of increases,” says Ebury’s managing director – Executive Digest

At the May meetings of the European Central Bank (ECB) and the North American Federal Reserve (Fed), interest rates were raised by 25 basis points. However, the scenario on both sides of the Atlantic is different.

The Fed suggested pausing rate hikes at the June meeting, as it needs to see lower inflation to do so. The ECB is not yet done with this cycle of increases,” says David Brito, managing director of the Banque Iberia, adding that both central banks continue to rely heavily on evolving economic data and hinting that any future guidance is, for now, premature.

With regard to currencies, the dollar fell slightly against European currencies and more sharply against the currencies of countries exporting raw materials. However, the last barriers of differences for the euro and the pound remain.

The focus this week will be the Bank of England’s monetary policy meeting, where a 25 basis point rise is expected, and the release of the US CPI report for April on Wednesday.

Ebri stresses that in the Eurozone, Christine Lagarde’s statement did not provide any forward guidance regarding potential new interest rate hikes by the European Central Bank. “The main question, of course, is how many more climbs are on the way. They stress that the current market forecast of only two more increases of 25 percentage points looks very optimistic, given the rigidity of core inflation in the eurozone, and we expect at least three more increases and the consequences of that.” of the strength of the common currency.”