BREAKING: EUR gains after ECB delivers 25 bp rate hike!

The European Central Bank announced its latest monetary policy decision today at 1:15 pm BST. Market expected the ECB to deliver the second 25 basis point rate hike in a row and there was no surprise - deposit rate was hiked from 3.25 to 3.50%, reaching the highest level since mid-2001. A new set of economic projections showed upward revisions to inflation forecasts, especially core inflation, as well as a small downward revision to GDP forecasts for 2023 and 2024. ECB also said that it will discontinue reinvestments under APP programme in July.

GDP forecasts

• 2023: 0.9% vs 1.1% previously
• 2024: 1.5% vs 1.6% previously
• 2025: 1.6% vs 1.6% previously

Headline inflation forecast

• 2023: 5.4% vs 5.3% previously
• 2024: 3.0% vs 2.9% previously
• 2025: 2.2% vs 2.1% previously

Core inflation forecast

• 2023: 5.1% vs 4.6% previously
• 2024: 3.0% vs 2.5% previously
• 2025: 2.3% vs 2.2% previously

Market attention now turns to the press conference of ECB President Christine Lagarde, which is scheduled to begin at 1:45 pm BST. 

EURUSD jumped following an in-line ECB rate decision and an upward revision to inflation forecasts. Source: xStation5