Business News Asia
The euro is gaining against the dollar and the yen after the European Central Bank (ECB) decided at its meeting yesterday to maintain the key interest rate and reduce the volume of bond purchases.
- The euro against the dollar was 0.51% higher to $1.134.
- The euro against the yen rebounded 0.6% to 129.44 yen.
- The dollar was down 0.48% to 96.498.
The European Central Bank (ECB) will leave its key interest rate and refinancing rate at 0%, a record low. It will also leave the interest rate for deposits that commercial banks have deposited with the ECB at -0.50%, while the interest rate for loans will remain at 0.25%.
Meanwhile, the ECB said it will buy bonds worth €40 billion/month under its asset purchase program (APP) in the second quarter of 2022 and reduce the line to €30 billion in the third quarter. Starting in October 2022, the ECB will buy bonds worth €20 billion as long as this is necessary to maintain market liquidity.
The ECB is trying to combat the rising consumer price index (CPI) in the eurozone, which rose by 4.9% year-on-year in November. The increase represents the highest level in 25 years (4.1% in October), and shows that the CPI is still more than double the ECB’s inflation target of 2%.