Following tests simulating a sharp tightening of monetary policy in the euro area, the ECB announced that the bloc's banks are well prepared for sharp interest rate fluctuations. The results come immediately after rumors that the ECB is considering changing its monetary policy by raising interest rates and reducing the QE program. The ECB found that higher interest rates would lead to higher net interest income and a lower economic value over the next three years. Taking into account the stress test and the ECB's latest comments, it is not impossible for the bank to undertake tightening of monetary policy by the end of the year.
If this is the case, we expect the euro to rise sharply, and the shares of European banks will have a strong bullish trend.
Source: Bloomberg Pro Terminal
Jr Trader Petar Milanov
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