The euro is holding steady around $1.05, close to its lowest value in two years. This stability comes from recent inflation numbers from Europe, which have investors guessing what the European Central Bank (ECB) might do next regarding interest rates.
In Germany, inflation didn’t rise as much as experts expected. The rate stayed at 2.4%, even though analysts thought it would increase to 2.6%. Over in Spain, inflation went up to 2.4%, which matched what was predicted.
Everyone is now looking forward to the Eurozone’s overall inflation data, which will be released on Friday. Many believe it will show higher inflation, but Germany’s lower-than-expected numbers suggest the increase might not be as big as once thought.
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Some investors are betting that the ECB might cut interest rates next month to help boost Europe’s sluggish economy. There’s even talk of a larger cut of 0.5%. However, ECB executive board member Isabel Schnabel warned against making big cuts. She mentioned that interest rates are already close to a neutral level, and reducing them further might limit the bank’s options in the future.