Euro Falls to 2025 Lows After ECB Holds Rates
The euro fell to $1.11 on Thursday, touching its weakest level since May 2025, after the European Central Bank (ECB) kept interest rates unchanged. Sentiment was further weighed down by reports that President Christine Lagarde plans to step down early, alongside concerns over elevated energy costs and France’s fiscal outlook. Policymakers maintained a wait-and-see approach after raising rates twice since the Iran war disrupted energy markets. Although officials warned that inflation could approach twice the ECB’s 2% target, they have yet to see clear evidence that higher oil and gas prices are spreading to broader inflation. The ECB offered little guidance on its future rate path, with policymakers relying partly on tighter financial conditions to curb inflationary pressures. Traders slightly reduced their expectations for further tightening, pricing in around 70 basis points of rate hikes by the end of 2027, down from 72 basis points previously.
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The euro fell to $1.11 on Thursday, touching its weakest level since May 2025, after the European Central Bank (ECB) kept interest rates unchanged. Sentiment was further weighed down by reports that President Christine Lagarde plans to step down early, alongside concerns over elevated energy costs and France’s fiscal outlook. Policymakers maintained a wait-and-see approach after raising rates twice since the Iran war disrupted energy markets. Although officials warned that inflation could approach twice the ECB’s 2% target, they have yet to see clear evidence that higher oil and gas prices are spreading to broader inflation.
The ECB offered little guidance on its future rate path, with policymakers relying partly on tighter financial conditions to curb inflationary pressures. Traders slightly reduced their expectations for further tightening, pricing in around 70 basis points of rate hikes by the end of 2027, down from 72 basis points previously.