European Central Bank releases interest rates decision

The European Central Bank (ECB) will release its interest rate decision today.

While the Eurozone’s inflation rate started the year with a brief slow-down, especially in Western European countries, inflation surged during the month of May, raising questions about whether the ECB will cut rates or not. While mainly due to the sudden unexpected rise in food and energy prices—which are exacerbated by the ongoing war in Ukraine—the recent increase is saw a rise in core inflation, which excludes food and energy.

However, analyst are confident that the ECB will likely implement a 25-basis-point cut to interest rates. This is primarily because the ECB aims to refrain from giving the wrong idea to investors in hopes of further reviving the economy. A rise in interest rates could pressure investors to falsely believe that inflation will rise again during the short-to medium-term. These perceptions could impact the market negatively.