Euro drops, stocks rise as ECB vows to keep rates low

The central bank also slashed its growth forecast for the rest of the year, citing threats of rising protectionism and global trade fears, but still said it would end a mass bond-buying programme.

Euro drops, stocks rise as ECB vows to keep rates low

World Bulletin / News Desk

The euro fell and eurozone stocks surged after the European Central Bank said it expected interest rates to remain at current record lows for at least another year.

"The euro and British pound erased early advances versus the US dollar on the heels of the ECB decision," Charles Schwab analysts wrote.

The ECB call to hold rates until "at least" the summer of 2019 was a surprise to those expecting the central bank to hike rates at least once by then.

"EUR/USD has sold off hard on the announcement that the ECB 'anticipates' ending QE in December this year and keep rates unchanged at least through the summer of 2019," said Chris Turner, global head of strategy at ING.

"This has come as a disappointment to the rates market, which had priced close to 10bp of ECB rate hikes by June 2019," he said, adding however that the euro sell-off was probably overdone.

Higher interest rates typically bolster a currency as it becomes more attractive to hold.

Overall, analysts said the ECB's exit announcement from bond buying had been well-handled, as it prompted no drastic market reactions.

Last Mod: 14 Haziran 2018, 17:37
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