BREAKING: EUR weakens after ECB lifted key rate to 1.25%

The ECB raised its benchmark interest rate by 75 bps to 1.25 %, highest level since November 2011 as widely expected.

• ECB significantly revised inflation projections and inflation is now expected to average 8.1% in 2022, 5.5% in 2023 and 2.3% in 2024.
• Central bank will re-evaluate its policy path on a regular basis in light of new information and changing inflation expectations.
• Over next several meetings the ECB expects to raise interest rates further to dampen demand and guard against risk of a persistent upward shift in inflation expectations.
• Policymakers notice that very high energy prices are reducing purchasing power of people’s incomes and, although supply bottlenecks are easing, they are still constraining economic activity. Price pressures continue to strengthen and broaden across the economy, and inflation may climb further in the near term.
• ECB now expect economy to grow by 3.1% in 2022, 0.9% in 2023 and 1.9% in 2024

Investors will focus now on ECB President Lagarde comments at the press conference regarding the  economic outlook, energy crisis, and inflation.

EURUSD again fell below the parity level. Source: xStation5