ECB delays rate hike-Economist
2022.12.06 02:30
ECB delays rate hike-Economist
Budrigannews.com – Even though headline inflation is now close to its peak, the European Central Bank will need to raise interest rates several more times to control price pressures, ECB chief economist Philip Lane told the Milano Finanza.
“We truly do expect that more rate increments will be essential, however a ton has been done as of now,” the paper cited Path as saying on Tuesday. ” I think it’s safe to say that we are probably close to reaching inflation’s peak.
After raising rates by a total of 200 basis points (bps) in July to combat record-high inflation, the European Central Bank (ECB) has signaled a slower pace of monetary tightening this month, following two moves of 75 bps points.
This suggests that the ECB’s 1.5% deposit rate will rise by 50 basis points on December 15, followed by a series of moves in 2023 that could raise the rate to about 3%.
Although he reiterated his case for a slowdown, Lane did not explicitly support a move of 50 bps over a larger increase.
Lane, who makes policy recommendations for the rate-setting Governing Council, stated, “We should take into account the scale of what we have already done.” Therefore, a different basis will be used for the decision.”
Although inflation has already reached its highest point of 10.0%, it is still possible that it will rise again in early 2023.
Lane stated, “Given the significant increase in (price) increases, I don’t rule out some additional inflation early next year.” It will take time for inflation to return to 2% from its current extremely high levels.
The fact that underlying price growth, which excludes volatile energy and food prices, could still accelerate from its most recent reading of 5% and take even longer to decline is even more concerning for policymakers.
This is because previous price increases for energy are still affecting other industries, particularly services.
