NEW YORK (dpa-AFX) – The euro only briefly reacted negatively to the interest rate decision by the US Federal Reserve in New York trading on Wednesday. After slipping to 1.0951 US dollars, the common currency cost 1.1004 dollars even a little more than before the decision. The European Central Bank had previously set the reference rate at $1.0994.
As expected, the currency holders raised the key interest rate by 0.25 percentage points to a range of 0.25 to 0.50 percent in view of the high inflation. By the end of the year, however, the Fed expects the key interest rate to rise to 1.9 percent, according to its new forecasts. This is in line with market expectations. In December, the central bankers themselves only hinted at three interest rate hikes this year of 0.25 points each. In addition, they now expect significantly lower economic growth for 2022 than assumed three months ago.
Before the interest rate decision, the euro had been supported primarily by signs of easing in the Ukraine conflict. The negotiations between Kyiv and Moscow about an end to the war are apparently becoming more concrete. Documents are being prepared for possible direct talks between President Volodymyr Zelensky and Russian President Vladimir Putin, said Ukrainian presidential adviser Mykhailo Podoliak, according to an interview with US broadcaster PBS.
According to the Financial Times newspaper, both sides are working on a 15-point plan. First and foremost are the neutrality and demilitarization of Ukraine demanded by Russia and the withdrawal of Russian troops demanded by Kyiv. Territorial issues should therefore only be discussed later. Podoliak confirmed the existence of a draft agreement with Russia, but dampened expectations. The 15-point plan only reflects the Russian demands, “no more,” Podoljak wrote on Telegram. The Ukrainian side has its own position./gl/jha/