ECB Poised for 'Insurance Hike' as Iran War Fans Euro Zone Inflation
The quarter-point move would lift the deposit rate to 2.25% as policymakers try to contain inflation above the ECB’s 2% target.
- On Thursday, the European Central Bank is expected to raise interest rates by 25 basis points to 2.25%, aiming to curb inflation currently exceeding the bank's 2% target in the 21-country currency bloc.
- Surging energy costs triggered by the Iran war have prompted policymakers to manage inflation expectations, fearing the impact will spread broadly across the euro zone economy.
- Several ECB watchers characterized the expected move as an "insurance hike," while President Christine Lagarde described it as a "measured adjustment" to address the inflation overshoot.
- Chief Economist Philip Lane noted the Iran-related shock may have broader scope than the Ukraine crisis, while financial markets expect two additional rate increases over the next year.
- Economists remain split on tighter policy due to weak economic growth, with senior economist Henry Cook at broker MUFG stating the ECB will "retain plenty of flexibility amid elevated uncertainty.
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17 Articles
ECB set to hike interest rates as inflation risks mount
The European Central Bank (ECB) is set to announce its monetary policy decision at 12:15 GMT following its June meeting. The Frankfurt-based institution is widely expected to raise its key interest rates by 25 basis points, taking the deposit facility rate to 2.25% from 2%. Such a move would mark the first rate hike since September 2023 and reflect policymakers’ growing concern about the inflationary impact of the energy shock caused by the war …
On Thursday morning, it appears that trading on the AEX will start lower. Wednesday's closing price was 1,051 points. The ECB is on the agenda today, with a possible interest rate hike of 0.25 percent. The CAC 40, Bel20, and DAX also point to a lower opening.
In the euro area, key interest rates are expected to rise – but what will happen next? New forecasts and nuances in ECB head Lagarde's communication will be relevant.
ECB poised for 'insurance hike' as Iran war fans euro zone inflation
ed.nl
Het ParoolEveryone assumes that the European Central Bank (ECB) will raise interest rates on Thursday. That increase is necessary to curb rising inflation. And that could very well be good news for savers.
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