INTEREST RATES AND CURRENCIES: Eurozone inflation in the ECB’s target – Interest rates falling

According to the latest figures, total inflation in the euro area slowed to the European Central Bank’s (ECB) target level of two percent in December. In terms of monetary policy, core inflation was 2.3 percent in December.

The rise in consumer prices rested on the shoulders of services, he estimates OP Pohjolan senior market economist Jari Hännikäinen.

“In our view, the ECB can be quite satisfied with the inflation picture in the euro area. The central bank has managed to stabilize inflation close to the target level, and total inflation has fluctuated for almost two years now in a narrow range of 1.7-2.4 percent without clear directional pressures,” Hannikäinen estimates.

The market estimates that the ECB will keep the key interest rate at the current level of 2 percent throughout this year. Among other things, the Euribor interest rates used in mortgages have remained between about 2.0 and 2.3 percent since the second half of last year.

Interest rates on European government bonds were falling. The interest rate on Germany’s ten-year government bond was about four percentage points lower at 2.800 percent, and the British one was seven percentage points lower at 4.410 percent.

In the US, the employment report is tense

Interest rates on government bonds were also falling in the United States, as investors awaited new economic figures and followed geopolitical uncertainty.

The interest rate on the country’s ten-year government bond was about four percentage points lower at 4.138 percent. Interest rates on the five-year and 30-year government bonds were also falling.

On Wednesday, US private sector job numbers were released, which increased by 41,000 jobs. Analysts had predicted that jobs would grow by 50,000 jobs.

Expected US non-farm payrolls and the unemployment rate will be released on Friday.

On the foreign exchange market at 4 p.m., one euro fetched 1.1691 dollars, 182.88 yen, 0.8664 pounds and 10.729 Swedish kronor. One dollar equals 156.42 yen.