As inflation has started to hit Europe, the German year-to-year Consumer Price Index (CPI) readings have exceeded expectations.
According to previous readings the recent inflationary shocks could have weakened the Euro-dollar rate, however, the rising prices have definitely made an impact on Germany, which is Europe’s powerhouse.
Due to the U.K. being off for a bank holiday yesterday, the EUR/USD pair was trading at a pretty stagnant level going down to 1.2130. However, it had recovered eventually going up to 1.2187.
ECB’s Visco told the Bank of Italy’s annual assembly with respect to inflation that in the current situation, “uncertainty over the timing and the strength of the recovery require that financial conditions remain supportive for a long time.”
While also adding that the ECB was prepared to make “full use of its already defined bond-buying programme”, Visco said, “Large and persistent rises in interest rates are not justified by the current economic prospects and will be countered.”
In addition to this, the Organisation for Economic Cooperation and Development (OECD) increased the estimated global growth forecast GDP for the year 2021 from 5.6% to 5.8%, while simultaneously upping the 2022 estimation from 4.0% to 4.4%.