EUR/USD – Euro Falls Following the Raise in Interest Rates

Saturday, July 5, 2008

In a press conference held by the European Central Bank President Jean-Claude Trichet, the highly anticipated rise in interest rates to 4.25% was revealed, the first rise since June of last year. He added that the current interest rates will contribute in achieving price stability in the region.

Analyst believe that this statement means that only the next set of economic data will determine the possibility of further interest rate rises, which are not expected anytime soon.

This increase follows the release of data showing that the European inflation had reached 4%, a 9-year high, doubling the inflation rate the ECB had planned to keep when the euro was first launched in 1992.

The euro stood at $1.5890 before the Trichet's statement, which brought about a fall of 0.5%, leaving the euro at $1.5803.



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