Isabelle Schnabel, a member of the ECB’s Executive Committee, warned over the weekend that the central bank must act aggressively to fight inflation, even if it pushes economies into recession.
Important losses are recorded by European stocks today, while the bond yields soared as statements by European Central Bank (ECB) executives reinforced fears aggressive measures to tackle inflation amid rising recession risks.
The pan-European stock index Stoxx 600 fell 0.8% to a more than one-month low, with interest-sensitive technology stock returns posting the biggest decline of 1.4%.
The performance of German 10-year bonds rose 10 basis points to a two-month high.
THE Isabel Schnabela member of the ECB’s Executive Committee, warned over the weekend that the central bank must act aggressively to fight inflation, even if it pushes economies into recession.
Previously, the chairman of the US central bank (Fed),Jerome Powell, had warned on Friday that the Fed will raise interest rates as needed to limit growth.
The governor of the French central bank, Villeroy de Gallosaid on Saturday that the ECB should proceed with another “significant” rate hike in September.
The head of the central bank of Latvia, Martins Kazakhsnoted that a recession in the Eurozone is very likely but would not by itself lead to a reduction in inflation and that the ECB must decide on a major rate hike next month.
Markets are now predicting a two-thirds chance (67%) that the ECB will raise its key interest rates by three-quarters of a percentage point (75 basis points) at the September meeting, up from 24% last week.
RES-EMP
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