The EUR/USD currency pair hovered above a 3-week low of 1.1655 on Thursday ahead of the outcome of the European Central Bank’s policy meeting, while the Fed held rates steady.
The European Central Bank is largely expected to keep its main refinancing operations rate intact at 2.15% at its April 30th meeting.
And, the ECB deposit facility rate is expected to be kept at 2.00%.
The ECB’s March decision to hold rates was framed against a backdrop of uncertainty around inflation and growth linked to joint military operations by the United States and Israel against Iran.
ECB President Christine Lagarde had cautioned that the “increase in energy prices will drive inflation above 2% in the near term.”
A report by Reuters had suggested that the ECB might consider discussing an increase in key borrowing costs in April and could move to raise rates in June if elevated energy prices persist.
Meanwhile, the Federal Reserve kept its benchmark interest rate unchanged in a target range of 3.50% to 3.75% at its April policy meeting.
The decision, passed by an 8-4 vote, has been the most divided since 1992, with three officials objecting the language in the statement, which suggested a bias toward easing.
During the subsequent press conference, Fed Chair Jerome Powell cautioned that near-term inflation expectations were moving higher. He also stated that he would remain on the Board of Governors for an indefinite period, even after his term as chair concludes.
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