ECB’s Liebscher Warns on Inflation
The ECB’s Klaus Liebscher attempted to remove some EUR/USD negativity, which has increased since the ECB’s rate decision last week. The ECB council member said he expects a protracted period of inflation above 2%, and that the ECB had cause to increase hike rates in July.
Liebsher promised the ECB would continue to warn on the “worrying” level of EU inflation, though the ECB claims to have no forward rate bias.
Liebsher’s attempt at jawboning EUR/USD higher comes after EUR/USD’s near-4% decline last week. Interest rate futures in the EU imply a 4.95% rate by year’s end.
Liebsher’s comments have had a limited impact on EUR/USD, which continues to dance around the 1.50 handle, but his hawkish comments may have prevented a more extended sell-off after EUR/USD tested 1.49 overnight.