Oil gains after ECB cuts interest rate

Oil prices found some support after the European Central Bank (ECB) cut its key interest rate by 25 basis points.

PHOTO: Oil barrels. Getty Images

In a move that was largely anticipated, the ECB cut its key interest rate to 2.75% at the bank’s 26-member rate-setting council meeting today.

The reduction in benchmark interest rates was “as expected,” VANDA Insights’ founder and analyst Vandana Hari remarked.

Meanwhile, the US Federal Reserve (Fed) has maintained interest rates in the current range of 4.25-4.50%. The decision was taken at its Federal Open Market Committee (FOMC) meeting, which conclude yesterday.

“The US Federal Reserve kept the policy rate unchanged at the 4.25-4.50% range as expected after its FOMC meeting yesterday and indicated it was in no rush to make any further rate cuts,” analysts from Saxo Bank said.

Lower interest rates can make the greenback weaker against other currencies and boost demand growth for dollar-denominated commodities like oil.

“Fed Chair Powell indicated in the press conference that the rate would be held unchanged until the FOMC has a chance to assess the impact on inflation of Trump’s policies on tariffs, deportation of illegal immigrants and deregulation and tax cuts,” the analysts added.

By Aparupa Mazumder

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