Euro nudges lower after ECB holds steady, stocks inch up
TLT•The ECB held interest rates steady as expected, while the euro and euro zone bond yields edged lower and European stocks rose. The bank warned that rising energy costs were increasing inflation risks and could strengthen bets on a December rate hike.
1. Markets react to decision
The euro fell 0.4% to $1.1107, after earlier reaching its lowest level since May last year. Germany’s 10-year bond yield dropped 4 basis points to 3.34%, while the two-year yield fell 5 basis points to 3.049%. The STOXX 600 rose 1%.
2. Inflation and leadership
The ECB warned that surging energy costs were increasing inflation risks. Market attention shifted to a news conference by central bank leaders for clues on the rate outlook. President Christine Lagarde announced she would step down on February 7, ahead of schedule.
