The concept of higher for longer interest rates is providing a tailwind to the greenback which is trading at 10-month highs.
Euro zone governments will try to bolster their public finances next year by withdrawing expensive energy price subsidies but slower economic growth and fear of angering voters are likely to limit fiscal tightening, officials said. The European Central Bank has called for governments to roll back subsidies introduced to help people cope with the spike in energy prices that followed the start of the Ukraine war, saying doing so will help it stabilise inflation over time. The 20 countries that share the euro currency have to submit their 2024 budget drafts for European Union inspection by Oct. 15.
FRANKFURT (Reuters) -The amount of money circulating in the euro zone shrank by the most on record last month as banks curbed lending and depositors locked up their savings, two tangible effects of the European Central Bank's fight against inflation. Faced with the highest inflation rates in its nearly 25-year history, the ECB has turned off the money taps by jacking up interest rates to record highs and withdrawing some of the liquidity it pumped into the banking system over the previous decade. The ECB's latest lending data on Wednesday showed this sharp increase in borrowing costs was having the desired effect and may fuel a debate over whether such a brisk tightening cycle may even push the 20-country euro zone into a recession.