Only five weeks have passed since the latest rate cut, but the European Central Bank (ECB) is on course for another one now – and more may come. EUR/USD may struggle to recover. Live coverage.
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ECB faces lower inflation, higher unemployment
The European Central Bank (ECB) has "one needle in its compass" – getting headline inflation to 2%. After three years of above-average rates, the Frankfurt-based institution has achieved a sub-2% read. However, this is also a result of an economic slowdown. There are fears of growing unemployment, especially in Germany.
ECB President Christine Lagarde is set to preside over the third cut in total, and the second one in a row. Markets are pricing further reductions to borrowing costs in the next few meetings – but the bank may push back against any pre-committing to any big moves.
This meeting converges with the release of US Retail Sales and weekly Unemployment Claims in the US, triggering more volatility in EUR/USD.
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(This story was corrected on June 6 at 07:45 GMT to say that the European Central Bank is set to cut interest rates for the first time since 2019, not 2020.)
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