ECB could commit to further reducing its balance sheet, providing ongoing support to EUR – Crédit Agricole
|Economists at Crédit Agricole analyze EUR’s outlook ahead of the European Central Bank (ECB) policy meeting.
ECB may have concluded its rate-hiking phase
While the ECB may have concluded its rate-hiking phase, it is expected to pursue QT by reducing its balance sheet and withdrawing excess liquidity from the system. This ongoing shift towards a less accommodative monetary policy could continue to underpin the EUR.
While the ECB's balance sheet reduction could potentially support the EUR, it's also important to consider the impact on peripheral economies within the Eurozone. Tightening financial conditions could pose challenges, possibly limiting the EUR's upside.
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