Economic growth in the euro area is reported to be slowing markedly, but the European Central Bank is poised to raise interest rates sharply again. Now central banks in Latvia, the Netherlands and Germany are sounding the alarm as inflation in those countries reaches double-digit levels, the highest in nearly 70 years. In the face of this, the ECB will stick to its existing policy of raising interest rates. Christine Lagarde, president of the European Central Bank, said it would control inflation at the expense of economic growth. For that reason, experts predict the Bank of Europe will raise interest rates by another three-quarters of a point, to 2%, on Thursday and take steps to limit market liquidity in the eurozone, despite warnings from the International Monetary Fund that the bloc is headed for recession. It is impossible to predict how far the ECB will go to curb inflation, which is running at 9.9%.
That’s bad for people who need to borrow from banks. Everything suggests that the ECB will continue to raise interest rates aggressively. Market consensus: another 0.75 point gain for the ECB on Thursday. With this move, the eurozone base rate will rise from 0 per cent to 2 per cent and the deposit rate from -0.5 per cent to 1.5 per cent in just three months. Frederic said a 2 percent deposit rate would be introduced by the end of the year. That means the base rate still needs to rise by half a point in December, to 2.5 per cent.
Post time: Oct-28-2022