ECB should get to the neutral rate | 30 August 2022

30 August 2022, EUR/USD

ECB should get to the neutral rate

EURUSD trading plan:

The European Central Bank should raise interest rates at a "steady pace" until the end of its hiking cycle, partly to maintain room to correct the policy path if circumstances change, ECB chief economist Philip Lane said. "A steady pace - that is neither too slow nor too fast - in closing the gap to the terminal rate is important for several reasons," Lane said, without expressing a preference for the Sept. 8 policy decision. "The appropriate size of the individual increments will be larger the wider the gap to the terminal rate and the more skewed the risks to the inflation target," he told a conference in Barcelona. ECB should get to the neutral rate, which neither stimulates nor cools the economy, somewhere around the turn of the year. This rate is estimated at around 1.5% to 2%, suggesting a hike at every remaining policy meeting this year.

Investment idea: range 0.9940 -1.0040.

David Johnson
Analyst of «FreshForex» company
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