EUR/USD has gained nearly 2% this quarter despite the resurgence of coronavirus across the Eurozone. The common currency’s resilience puts downward pressure on inflation and is a cause for concern for the European Central Bank (ECB).
According to Robin Brooks, Chief Economist at the Institute of International Finance (IIF), the central bank should lengthen the duration of its quantitative easing or asset purchase program to outdo the US Federal Reserve (Fed) and push the EUR lower.
“Basic issue is that the Fed out-eased the ECB,” Brooks tweeted while adding that the central bank should not cut the deposit rate and refrain from talking about the exchange rate.
Interest rates on the ECB’s main refinancing operations, marginal lending facility, and deposit facility remain at 0.00%, 0.25%, and -0.50%.
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