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European Central Bank (ECB) Governing Council member Olli Rehn said on Friday that the slowdown in inflation alongside weakness in the Eurozone economy strengthened arguments to lower borrowing costs next month, per Bloomberg.  Key quotes The growth outlook in Europe, especially manufacturing, is rather subdued. In my eyes, this enforces the case for a rate cut in September. We already have plenty of data to make our decision in September. Disinflation and a weak economy support a September cut. Downtrend in inflation is on track. We are still seeing strong services inflation. The disinflationary process has been ongoing since autumn 2022 and it’s still going on. Asked about 50 bps, says they always have to be open. Says he doesn’t want to commit to anything, data-dependent. Market reaction At the time of press, the EUR/USD pair was down 0.02% on the day at 1.1188.  ECB FAQs The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region. The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde. In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro. QE…

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Filed under: News - @ August 26, 2024 12:52 am