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ECB Monetary Policy – Inflation and the Euro

ECB Monetary Policy – Inflation and the Euro

The European Central Bank (ECB), faced with high levels of inflation in the past few months, was forced to review and radically alter its monetary policies. The euro has been affected by inflation, and is losing ground in comparison to the US dollar, its main competitor.

The Euro is one of the most traded currencies around the globe, along with the US Dollars and British Pounds. This blog will share valuable insights for beginner traders who’d like to trade the euro regarding the bloc’s inflation and the central bank’s monetary policy forecast.

Eurozone Inflation Surges To Record-Highs 

The European Central Bank set an inflation target of 2%. For many years the ECB’s governing board was able to deliver monthly inflation rates close to its target and sometimes close to 0. Eurozone’s central bank managed to keep inflation in check in the last decade, although interest rates were kept close to historical lows.

The coronavirus pandemic forced the ECB to reduce interest rates even more in order to support the euro bloc’s economy which suffered from lockdowns and other government-implemented measures. Salaries were paid despite a reduced level of economic activity. A special fund was created to…

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