Bloomberg: Two more 50 basis point ECB rate hikes by May

Two consecutive hikes in key interest rates of 50 basis points each are coming from the European Central Bank, according to a poll of economists by Bloomberg.

Experts who participated in the survey expect the ECB’s key interest rate to remain at 3.25% for about a year, as they estimate that from June the reductions will begin in steps of 25 basis points each time.

Despite a total increase of 250 basis points to date – marking the ECB’s most aggressive monetary tightening move yet – more than half of analysts believe the central bank still has room to deal with the worst rate hike in the eurozone’s history. Only a third of economists surveyed fear ECB officials will raise interest rates too much.

Its first monetary policy meeting ECB will take place next Thursday and it is assumed that another increase of 50 basis points will be decided, something that the president of the ECB has already announced since December, Christine Lagarde.

Lagarde and other ECB officials have already signaled that another 50 basis point hike will follow, likely in March. Other officials, however, recommend a more gradual escalation. Only four of 46 economists polled by Bloomberg see an increase of just 25 basis points likely in March.

“The main point of attention at the February meeting will be the indications for March,” said Mr Juss Hiljanenhead of European macro research at SEB, noting that there is a risk that even a simple change in the ECB’s language could be interpreted by markets as a change in stance

Decisions are not easy. Inflation has slowed to single digits but still remains much closer to 10% than the ECB’s 2% target. Officials are focusing on core inflation, which excludes energy and food prices, which hit a new record in December.

“The biggest challenge for the ECB’s governing board is to balance between the fall in nominal inflation that is easing due to lower energy prices with structural inflation that is still rising,” said Veronica Roharova, head of euro zone economics for Credit Suisse. . For the ECB, structural inflation will be more important.

moneyreview.gr

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