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ECB: ready to raise rates in the coming months

2022-09-22T08:51:36.990Z

The ECB, after the three-quarter point squeeze at the beginning of September, "expects to further raise interest rates in upcoming meetings to curb demand and protect from the risk of a persistent increase in investment expectations ... (HANDLE)



The ECB, after the three-quarter point squeeze at the beginning of September, "expects to further increase interest rates in upcoming meetings to curb demand and protect against the risk of a persistent increase in inflation expectations", which "it is likely to remain above target for an extended period of time."


    It can be read in the Economic Bulletin of the Central Bank which recalls inflation at 9.1% in August and the upward revision of the projections of the experts to 8.1% in 2022, 5.5 in 2023 and 2.3. in 2024. "After the recovery observed in the first half of 2022, recent data indicate a considerable slowdown in growth in the euro area, with the economy expected to stagnate later in the year and in the first quarter of 2023".

This can be read in the Economic Bulletin of the European Central Bank, which notes the decline in the SME services index in August "which indicates a stagnation in activity".

According to the ECB, "there are clear signs of a protracted slowdown in economic activity in a context of high inflation and persistent uncertainty linked to the war in Ukraine and energy-related trends".

"Indicators from the markets suggest that, in the short term, oil prices will fall, while wholesale gas prices will remain at extraordinarily high levels."

"The inflation of food goods - it continues - grew significantly, from 9.8 to 10.6% between July and August, driven upwards by the world prices of food raw materials and by the increase in their producer prices in euro area ".

"In light of the deteriorating economic outlook and current inflationary pressures,

However, the ECB encourages a reversal of the trend with respect to the "rain" support of the pandemic.

"Budget support measures aimed at cushioning the impact of energy price increases should be temporary and targeted at the most vulnerable households and businesses, so as to limit the risk of fueling inflationary pressures, improve the efficiency of public spending and preserve debt sustainability ".

However, the ECB encourages a reversal of the trend with respect to the "rain" support of the pandemic.

"Budget support measures aimed at cushioning the impact of energy price increases should be temporary and targeted at the most vulnerable households and businesses, so as to limit the risk of fueling inflationary pressures, improve the efficiency of public spending and preserve debt sustainability ".

Markets are betting on 225 basis points of further monetary tightening by June

, with the deposit rate set by the ECB which would thus reach 3% from the current 0.75%.

Bloomberg writes on the basis of data obtained by cross-referencing the swap contracts with the dates of the next meetings of the central bank's Governing Council.

The drastic increase in the tightening expected by the markets - the ECB is officially discussing whether the "terminal" rate where the ECB intends to stop should be 2% or not - follows the Fed's decision yesterday to raise another 75 basis points.

Expectations of further gas prices also weigh heavily after the escalation of the war in Ukraine announced by Putin.

Debt sustainability "depends on economic growth" and "the Next Generation Eu plays a significant role.

Source: ansa

All life articles on 2022-09-22

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