The Euro raised c. 12.25% since January against Dollar, partially in the wake of US fiscal and political uncertainty but mainly on Eurozone’s consecutive quarters of growth and a post-crisis pick of the GDP to 2.3% YoY in Q2 2017.

Real GDP rose by 0.6% in the same quarter while the EU GDP Annual Growth Rate has expanded consecutively over the past 14 months.

ECB says that inflation is expected to decline in the short-term as a result of the appreciation in the Euro exchange rate before rising to 1.5% again, however, this will be also influenced by the time ECB decides to decrease its monthly asset purchases.

ECB’s stance and Euro’s rally reduced the possibility of a rate hike this year.

For the period of January 2015 and up to today, ECB has maintained a zero-interest-rate and despite this does not imply that ECB is well prepared to hike rates owed to the continuous economic expansion, it signals that a dampening of the ultra-low interest rates and a reduction in the monthly bond purchases may be in play soon.

In fact, Reuters published a poll supporting that ECB is likely to announce a reduction in its monthly bond purchases in the October’s press conference.

At his latest Introductory Statement to the Press Conference, ECB President Mario Draghi said that the net asset purchases:

“are intended to run until the end of December 2017, or beyond, if necessary”

and until a sustained path towards inflation targets is achieved.

President Draghi added that:

“inflation will gradually head to levels in line with ECB’s inflation aim”

, providing welcomed information to investors. Yet, the accommodative monetary policy stance may be a sign of a long-waited hike.

Looking at the Consumer price inflation (HICP), this is at a level of 1.50% for the month of August, same as last month, and 0.40% last year.

This is lower than the long-term average of 1.68%. In order for the ECB to maintain stability the HICP inflation rate must remain near the 2.0%, over the medium term.

ECB’s macroeconomic projections for the Eurozone foresee a depreciation towards 1.20%, as Draghi indicated, by year end/start of 2018 reflecting the current futures prices for oil and effects in energy and commodity prices.