FRANKFURT: The euro jumped one percent versus the dollar Monday after European Central Bank chief Christine Lagarde signaled the end of ECB negative interest rates. The euro struck a one-month high at $1.0688 after Lagarde said the central bank would probably draw a line under the era of negative interest rates by September owing to soaring eurozone inflation. “That’s something that we were waiting for so long,” noted Swiss quote analyst Ipek Ozkardeskaya. “Lagarde is finally showing that the (inflation) situation is serious in Europe as well,” she told AFP.
Central banks around the world are increasing interest rates to tackle the highest inflation in decades but so far the ECB has refused to follow the likes of the Federal Reserve and Bank of England in hiking borrowing costs from record-low levels. Eurozone inflation soared by an all-time high 7.5 percent in April. The surge has been driven by soaring energy and food prices as economies reopen from pandemic lockdowns and following Russia’s invasion of Ukraine.
Oil prices jumped more than one percent Monday. Elsewhere, stock markets mostly climbed after US President Joe Biden said he was considering lifting some trade tariffs imposed on China by predecessor Donald Trump. Tariffs on hundreds of billions of dollars of Chinese imports are due to expire in July, and Biden has faced growing calls to get rid of the punitive duties to help combat the highest US inflation in more than four decades. Biden’s comments Monday came during a visit to Tokyo.
The president added that while a US recession was not inevitable, he acknowledged the economic pain felt by American consumers over soaring inflation. Ending the tariffs could help cut roaring US inflation by making imports cheaper. Biden also announced that 13 countries had joined a new, US-led Asia-Pacific trade initiative. Investors will be looking to the release on Wednesday of minutes from the last Federal Reserve meeting for clues on the pace of future interest rate hikes by the US central bank. – AFP