The Inflation Rate for Euros Is Now at Its Record High, How Are We to Benefit?

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In their recent meeting, the European Central Bank raised its interest rates to combat the recent rise in inflation. This is a policy change that has not been executed in ten years. As the oil supply issue has not been remedied, the European Central Bank is expected to further increase interest rates. According to Isabel Schnabel, an ECB board member, the bank is willing to commit to more drastic steps to curb inflation rates, to the point of risking higher unemployment.

A rise in interest rates means banks will make it harder for businesses and consumers to take out loans. This will, in turn, discourage people from taking out loans and in effect, it will combat inflation as the money supply dries up in an economy. This will mean there will be less spending within an economy and businesses are likely to report fewer earnings.

How can we traders take advantage of this ？

The next European Central Bank Interest rate Announcement is going to take place on the 8th of September where we will most likely see the ECB raise interest rates to get inflation under control. You must note that date, as after the announcement there likely will be increased volatility in the markets. On that day be sure to manage your open trades well as the volatility may dip you in massive profits or losses.

If the interest rates are high, this will likely mean the currency will gain value and we then go short on the Euro, if the announcement doesnt increase rates, then we short currency as no replacements for oil have been made and inflation will only continue to ravage the economy. Remember to keep a close on that announcement because regardless of the announcement, there is likely going to be market volatility. Good luck out there and Good hunting fellas.