Likely to be 50 basis points – This is the 4th rate hike – Another hike expected in March
By Chrysostomos Tsoufis
February kicks off with yet another increase, by all accounts expected and almost pre-announced. THE ECB is expected at 15.00 to announce the fourth increase in the key interest rate since September by probably 50 basis points. Thus it is expected to reach 2.5%.
Although in total the 4 hikes have led to an increase in interest rates by 250 basis points, i.e. 2.5%, no one thinks that …we are messing around here. There will be another increase in March – it could be as much as 25 basis points depending on how the data plays out and the outcome of the …battle between the “hawks” and the “doves” – and then …we’ll see.
Eurostat’s January inflation announcements were greeted with mixed feelings in Frankfurt. It may have slowed for the fourth consecutive month, but 8.5% is more than four times the target for inflation in the region of 2% in the euro area.
Furthermore, the situation remains extremely worrying in all individual categories. All-time high food inflation exceeded 14%, ex-food and energy index reached 7% going from record to record while pegged at all-time high and inflation excluding energy, food, tobacco and alcohol remains at all-time high of 5.2%. Based on these data, Christine Lagarde he is not expected to say that we have escaped the…danger.
The 4th increase in interest rates is expected to bring another increase in the cost of loans for thousands of borrowers. In July, a borrower with a mortgage of €100,000 and a repayment period of 20 years paid for the monthly installment of €605. From tomorrow, he will pay €745, that is, he will have been charged a total of €140/month or €1680/year.
For 30,000 such borrowers, fortunately, there is welfare provided entirely at their own expense by the banks. The platform for subsidizing 50% of the charge – in our example €70/month – for 12 months is already open. It is aimed at those who have an individual annual income of up to €7,000, increased by €3,500, per family member, with a maximum of €21,000, while the same figures apply to deposits. The maximum of the main residence must not exceed €180,000. Loan debts must not be in arrears for more than 90 days, while loans contracted after December 15, 2022 will not be subsidized.
The subsidy will be stopped if the borrower does not service his installment for a period longer than 30 days.
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