The European Central Bank (ECB) has announced that it will keep its refinancing rate at 1%. The overnight deposit rate will stay at a tiny 0.25%.
The Euro traded up ahead of the ECB decision, perhaps due to speculation that the ECB could surprise with a small hike. Yet despite Australia’s surprise earlier this week, it wasn’t in the cards.
This ECB announcement comes after The Bank of England kept its key rate at 0.5%.
Meanwhile the U.S. federal funds rate is at 0.25%.
We’ll likely be seeing a divergence between rate cycles for these major economies and those that were mostly unscathed by the crisis such as Australia and Brazil.
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