Capping a year of agenda-setting exclusives, Reuters exclusively revealed yesterday that the European Central Bank (ECB) would use its final rate-setting meeting of 2022 to upgrade its inflation forecasts for the euro area and to acknowledge that inflation would be well above its 2% target into 2025.
Such shifts in inflation forecasts have a direct bearing on future monetary policy – as it became fully apparent when the ECB officially confirmed the move today. Citing the inflation outlook and the need to “sustain the course” in the fight against it, ECB President Christine Lagarde made it clear that further significant rate hikes of 50 basis points a go would be needed for some time yet.
These comments drove the euro higher against the dollar and reset the market consensus on the future direction of rates.
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