CANBERA (dpa-AFX) - The euro firmed against its major counterparts in the New York session on Thursday, as the European Central Bank cut interest rates by 25 basis points as widely expected, but did not provide clues on rate cut path in the future.
The Governing Council, led by ECB President Christine Lagarde, cut the main refinancing rate by 25 basis points to 4.25 percent. The deposit facility rate was lowered from a record high to 3.75 percent and the marginal lending rate was reduced to 4.50 percent.
'Based on an updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission, it is now appropriate to moderate the degree of monetary policy restriction after nine months of holding rates steady,' the ECB said.
The central bank, however, acknowledged that domestic price pressures remain strong as wage growth is elevated, and inflation is likely to stay above target well into next year.
Consequently, the ECB staff raised the headline and core inflation projections for this year and next.
The ECB staff now sees headline inflation at 2.5 percent this year, 2.2 percent next year and at 1.9 percent in 2026.
Core inflation that excludes energy and food is projected at 2.8 percent this year, 2.2 percent next year and 2.0 percent in 2026.
The bank also projected Eurozone economic growth at 0.9 percent this year, 1.4 percent next year and 1.6 percent in 2026.
Policymakers will continue to follow a data-dependent and meeting-by-meeting approach to determining the appropriate level and duration of restriction, the central bank said.
'The Governing Council is not pre-committing to a particular rate path,' the ECB added.
The euro rose to 2-day highs of 1.0902 against the greenback, 0.8524 against the pound and 170.29 against the yen, from yesterday's close of 1.0868, 0.8500 and 169.68, respectively. The euro is seen finding resistance around 1.10 against the greenback, 0.86 against the pound and 171.00 against the yen.
The euro climbed to 0.9716 against the franc from Wednesday's close of 0.9711. The euro may find resistance around the 0.98 level.
The euro advanced to 1.4923 against the loonie from its previous close of 1.4884. The euro is likely to locate resistance around the 1.51 level.
The euro appreciated to near a 2-week high of 1.6404 against the aussie, from a 2-day low of 1.6298 hit at 9:30 pm ET. The pair had closed yesterday's deals at 1.6350. Next key resistance for the currency is seen around the 1.68 level.
The euro edged up to 1.7625 against the kiwi, from a 3-1/2-month low of 1.7526 seen at 9:30 pm ET. At yesterday's close, the pair was quoted at 1.7553. On the upside, 1.78 is possibly seen as its next resistance level.
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