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Fed Snooze, ECB Fireworks?
by David Brady Sprott Money
Today, the Fed did exactly as expected. It raised interest rates by another 0.25% to 5.25% and dropped language anticipating further rate hikes ahead. In effect, it paused, while leaving the door open for future rate hikes if warranted based on incoming data. Snooze button pushed.
Tomorrow, it is the European Central Bank’s turn to deliver their interest rate decision at 8:15 a.m. EST. The ECB is expected to raise rates by 0.25% with two more to follow in the months ahead.
Given that the EU’s core CPI was still extremely high at 5.7% relative to the United States’ and its key interest rate at just 3%, it was a toss-up between 25-50bp for the next hike just a week ago.