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The European Central Bank (ECB) Governing Council member Klaas Knot said on Saturday that the ECB should keep its options open regarding future interest rate moves, per Reuters.   Key quotes  “It is important that we keep all options open. Retaining full optionality would act as a hedge against the materialization of risks in either direction to the growth and inflation outlook.” “We believe that our meeting-by-meeting and data-dependent approach has served us well.” “We will have to see whether that was a little bit over-enthusiastic or not. We will only know once we do our own calculations again in December.” “On the one hand, policy restriction may be reduced more quickly if incoming data indicates a sustained acceleration in the speed of disinflation or a material shortfall in the economic recovery.”  Market reaction  At the time of press, the EUR/USD pair was up 0.01% on the day at 1.0795.   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…

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Filed under: News - @ October 28, 2024 12:46 am