September 8, 2022
On Thursday, the European Central Bank will increase interest rates once more in an effort to combat spiraling inflation; the only remaining uncertainty is by how much.
Policymakers are scurrying to maintain a lid on the bloc’s most harmful run of price growth in nearly half a century as it devours household savings and drags down company output out of concern that sky-high inflation is becoming entrenched.
The zero percent deposit rate rise will ultimately range between 50 and 75 basis points, with estimates currently tending towards a larger increase but not with full certainty.
The larger hike would represent the largest increase in the ECB’s benchmark rate in history, but regardless of the result, the bank’s course will be obvious.
Since price pressures are continually exceeding even the most gloomy projections, additional increases are anticipated in the upcoming months.
High energy costs will reduce purchasing power and almost probably cause a recession in the union, which might be made worse by an active ECB, especially when borrowing costs rise for governments as they attempt to aid those who are most impacted.
Source: Reuters
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