The European Central Bank raised its benchmark interest rate to 2.4%, after a year without changes

International

The European Central Bank (ECB) raised its monetary policy rate to 2.4% from the previous 2.15%, in line with analysts' consensus expectations and after a year of keeping it unchanged. The committee justified the decision based on the sustained increase in the price level, which remains above the institution's medium-term target (2.0%) due to the impact of the conflict in the Middle East on energy prices.

In the United States, wholesale inflation for May came in above expectations in the traditional measure, rising 1.1% month-on-month and 6.5% year-on-year, the latter representing the highest value since November 2022. Meanwhile, the measure excluding food and energy (core inflation) showed a slight slowdown compared to April, registering 0.4% month-on-month and 4.9% year-on-year, both figures lower than expected.

Yields on US Treasury bonds broadly increased yesterday following the inflation data. While the 1-year bond finished with a yield of 3.89%, up from 3.82% previously, the 3-year bond settled at 4.19%, compared to 4.17% on Tuesday. Meanwhile, the benchmark 10-year bond rose to 4.55% from the previous 4.52%.

On the other hand, the main US stock indices registered negative performances yesterday. The trend was led by the Nasdaq with a 2.0% decline, followed by the Dow Jones with a 1.9% drop and the S&P 500 with a 1.6% decrease. However, year-to-date gains are 8.3%, 3.9%, and 6.2%, respectively.

Source: PUENTE