EBC is braking. Middle East in focus
The European Central Bank decided to keep interest rates unchanged at 2,15% in April.
The ECB Governing Council, following the Bank of Japan, Canada, and the Federal Reserve, adopted a "wait and see" approach.
Read also: Dollar rate before the shock? Powell leaves the Fed. Tensions could affect USD/PLN and EUR/USD
Analysts, including the ING Think team, expected that the ongoing conflict between the United States and Iran in the Middle East would influence central bank decisions.
"In our base scenario we expect a moderately hawkish stance from the ECB, signalling high uncertainty and an undefined stance on the path of interest rates, implicitly leaving an open door for a hike in the summer of this year", they said.
Experts emphasized that "the recent rise in oil prices increased the likelihood, that the ECB will take a more hawkish stance today, but expectations regarding interest rates have been appropriately corrected".
"Current market valuations at year‑end are the most hawkish since the start of the war, considering a tightening of monetary policy by slightly over 80 basis points. This raises the bar for a positive outcome of today’s euro decision", we read in the report.
"To keep this sentiment, we need signals indicating that some members of the Governing Council were already ready to raise rates today, and hawks may decide to follow the Fed’s example and express their opposition to this decision", added.
The statement indicates that the above decision will not affect euro‑to‑dollar rates.
"Considering the recent deterioration of market sentiment due to the Middle East conflict, we do not think the ECB is hawkish enough to raise the EUR/USD rate on its own", economists said.
"As long as oil prices do not start falling today, the risk of the rate falling to 1,160 remains", they added.
Source: Trading Economics.
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Euro and dollar rates after the ECB decision. How strong is the Polish zloty?
The euro to zloty rate on Thursday, April 30 is at 4,25 PLN.
Chart. Euro to zloty (EUR/PLN)
Source: TradingView.
The euro to dollar rate reaches 1,16 USD.
Chart. Euro to dollar (EUR/USD)
Source: TradingView.
Read also: Euro rate will soon surprise? Expert says what will happen to EUR/PLN and EUR/USD
See also: Dollar rate will return to 4 PLN? Ground invasion of Iran still poses a threat. Expert: "Unlikely, but still potentially possible"
Source: ING Think.
