ECB’s Makhlouf: Can't rule out anything at future meetings

European Central Bank Governor Gabriel Makhlouf hinted on Thursday that the central bank could consider raising interest rates again in future meetings. Makhlouf stated that there are no indications of second-round effects of inflation emerging in the near future. He emphasized that risks to inflation are still on the upside. Some selling pressure was observed in the Euro against the US Dollar following Makhlouf's remarks, but it seems to be driven by a recovery in the US Dollar's position.

As of the time of writing, the EUR/USD exchange rate remains flat around 1.1465. The European Central Bank, based in Frankfurt, Germany, is responsible for setting interest rates and managing monetary policy in the Eurozone, with the primary goal of maintaining price stability, or an inflation rate of around 2%. The central bank achieves this objective by raising or lowering interest rates.

Higher interest rates typically strengthen the Euro, while lower rates weaken it. The Governing Council of the ECB meets eight times a year to make decisions about monetary policy, which are made by heads of national banks in the Eurozone and six permanent members, including ECB President Christine Lagarde. In extreme cases, the ECB can implement a policy tool called Quantitative Easing, which involves buying assets such as government or corporate bonds from banks and financial institutions, usually resulting in a weaker Euro.

Quantitative tightening is the opposite of QE, and it is implemented after an economic recovery is underway and inflation starts to rise, usually having a positive impact on the Euro.