IMF calls for continued rate hikes by central banks until 2024 to tackle inflation
Discounting an increase in its interest rate European Central Bank by 0.75% tomorrow, the euro and bonds moved up today. In fact, the exchange rate of the euro exceeded the limit of 1 to 1 against the dollar.
In the meantime today Bank of Canada, despite estimates to the contrary, proceeded with a more restrained move, increasing its interest rates by only 0.5% instead of 0.75% as estimated by analysts and markets. It is the second central bank after Australia to back off its aggressive stance.
On the other hand, its head International Monetary Fund Kristalina Georgieva today asked central banks to continue the fight against inflation by increasing their interest rates until they reach a “neutral” level. It is recalled that the recent interest rate hikes by the ECB were the central bank’s response to the deterioration of the economic outlook and inflation, which reached 9.9% in the euro zone in September, due to the jump in food and energy prices after the Russian invasion of Ukraine.
The managing director of the IMF predicted that central banks will continue to raise their interest rates “until 2024 when central banks will have to assess the effectiveness of these increases”. “The benefits will come, but they are not immediate, this requires some patience in society,” he added.
In the secondary bond market, and specifically in HDAT, transactions amounting to 56 million euros were recorded today, of which 12 million euros related to purchase orders. The yield on the 10-year bond fell to 4.74% from 4.94% yesterday versus 2.12% for the corresponding German bond, bringing the spread to 2.62% from 2.60% yesterday.
In the foreign exchange market, the euro is moving upwards against the dollar, surpassing the 1 to 1 limit against the dollar. Thus, in the early afternoon, the European currency traded at 1.0065 dollars from the level of 0.9984 dollars that opened the market. The indicative euro / dollar exchange rate announced by the European Central Bank was 1.0023 dollars.
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I have worked in the news industry for over 10 years and have been an author at News Bulletin 247 for the past 5 years. I mostly cover technology news and enjoy writing about the latest gadgets and devices. I am also a huge fan of music and enjoy attending live concerts whenever possible.
