According to the latest published data on the rate of inflation in the European Union (EU) for September this year 2023, it turned out that inflation in the EU fell slightly below 5 percent to a value of 4.9% year-on-year. Hungary has the highest inflation among EU countries, with a volume of 12.2% p.a. and the Czech Republic is the fourth worst EU country with an inflation rate of 8.3 percent. On the contrary, the lowest inflation was currently seen in the Netherlands during September 2023, where it even reached a slightly negative value of 0.3%, and Denmark had an inflation increase of 0.6% p.a. below one percent. and also Belgium, where the year-on-year inflation rate reached just 0.7% per year.
At present, these facts have manifested themselves within the foreign exchange markets in relation to the exchange value of the single European currency, the euro (EUR), against the main world currencies and especially against the US dollar (USD). Currently, during the European beginning of the afternoon on October 19, 2023, at approximately 13:29 CET, the global currency pair EUR/USD was traded within the forex trades of the foreign exchange market at the exchange rate at a value of 1.055 USD per EUR with the previous by the daily strengthening of the EUR by +0.17% against the USD. This mutual exchange rate was achieved when the exchange value of the US dollar fell slightly and the indicator of the value of the USD in the form of the dollar index DXY (US Currency Index) showed a point level of 106.46 USD points with a daily decrease of -0.1% so far point values.
According to economic reporters in connection with financial market analysts, a year ago, i.e. in September of last year 2022, the inflation rate in the entire European Union was 10.9 percent. In Hungary, the inflation rate was even 20.7 percent and in the Czech Republic 17.8 percent. In the eurozone, inflation in the amount of the inflationary volume was 9.9 percent a year ago. However, according to these experts, the current rate of inflation remains above the two percent target set by the European Central Bank (ECB) for price stability. This central bank of the Eurozone and the European Union thus expects inflation in the EU to reach this value by the end of 2025, but some representatives of the ECB consider this to be too late. Precisely for these reasons, when the ECB takes steps to suppress the rate of inflation in the eurozone, there is still more than a current consideration of a further possible increase in interest rates.
The current interest rates set by the Governing Council of the European Central Bank (ECB) are at very historically high values, and the ECB’s base interest rate is currently at a value of 4.50 percent per annum and the deposit rate, which until recently had a negative value of -0 .50% p.a. is today at the current rate of 4.00% p.a. with the fact that the interbank lending rate is 4.75% per annum. As part of efforts to suppress the high rate of inflation, the ECB has reassessed its monetary policy strategy several times, including its approach to asset purchases (APP). Over the years, the Board of Governors has taken several decisions to change the pace of purchases and reinvestments. The last recalibration took place on 15 June 2023, when the Governing Council announced that it would end APP reinvestment from July 2023. Going forward, the APP portfolio is expected to decline as assets mature, unless the Governing Council decides as needed to use this instrument to guide the ECB’s monetary policy.