European Central Bank President Christine Lagarde has confirmed the will within the broader ECB leadership to raise base interest rates during the summer. The next rate rise could come in September.
Returning to positive territory
The euro hit its highest level against the US dollar in a month during Tuesday’s trading. The single European currency strengthened by 0.2 percent to $1.07 per euro, while until recently it was trading just below $1.05 per euro.
Investors reacted to the words of European Central Bank President Christine Lagarde, who confirmed in her blog on the ECB website that the bank is tuned to raise base interest rates so that the deposit rate returns to positive territory in the third quarter of this year.
The first “hike” will come in July
This would mean that central bankers are likely to see a double rate hike in the coming months, as the deposit rate remains at -0.5 percent. The ECB cannot be expected to decide on such a dramatic rate hike in one step. The markets therefore expect the first “hike” to come in July and the second in September this year.