Euro Spikes Against The Dollar as Lagarde Hints at Tightening

“Compared with our expectations in December, risks to the inflation outlook are tilted to the upside, particularly in the near term. If price pressures feed through into higher than anticipated wage rises or the economy returns more quickly to full capacity, inflation could turn out to be higher,” Lagarde said before adding:

“With the upside surprise we have seen first in December, second in January, I can tell you there was unanimous concern around the table of the Governing Council about inflation numbers.”

The euro gained 0.8% on the dollar, spiking to nearly $1.14 from $1.128 during the press conference.

Bitcoin has not quite reacted however but has fallen lower today as Nasdaq sheds another 2.2% to continue a volatile session that has seen major corporations trade a bit like crypto.

Facebook crashed 25% amid fears its advertising business is being eaten up by TikTok as stock investors more widely play cautious amid an environment that is moving towards tightening.

The Bank of England has been most aggressive so far, raising rates by 0.25% today to 0.5%. Four members out of nine wanted to raise them by 0.5% to 0.75%.

All this means it is almost certain Fed will hike in March while markets now price in two rate rises from ECB this year although inflation in euro is relatively subdued at 3.2%.