ECB will raise rates at the next meeting-ECB Head
2023.01.11 16:12
ECB will raise rates at the next meeting-ECB Head
By Kristina Sobol
Budrigannews.com – ECB policymaker Pablo Hernandez de Cos stated on Wednesday that the European Central Bank anticipates continuing to raise interest rates “significantly” at subsequent meetings at a steady pace to ensure that inflation returns to the 2% target over the medium term.
De Cos stated at a financial event in the evening, “Keeping interest rates at tight levels will reduce inflation by dampening demand and will also protect against the risk of a persistent upward shift in inflation expectations.”
His position was in line with the ECB’s recommendations and came after Mario Centeno, the ECB’s policymaker, stated on Tuesday that the current process of increasing interest rates was nearing its conclusion.
Since July, the European Central Bank (ECB) has raised interest rates four times in a row to stop a historic rise in inflation and has promised to do so again to help price growth reach its goal.
The European Central Bank (ECB) anticipates that inflation in the euro area will exceed its target of 2% by 2025. As a result, it has increased interest rates by a total of 2.5 percentage points since July, the fastest rate of monetary tightening ever recorded.
“an increase in interest rates above what the market expected at the time,” according to these projections, would be necessary to achieve the inflation target over the medium term.
According to De Cos, the maximum level of interest rates anticipated by the market has increased by approximately 30 basis points to approximately 3.4% since the ECB’s most recent meeting.
However, he stated that the market’s “true expectation of what the maximum level of the deposit facility rate would be is somewhat below that figure” and that those market rates included a positive premium.
In any case, he stated that the institution’s future interest rate decisions would continue to be data-driven and that it was essential to keep stressing the significance of taking into account the “extraordinary uncertainty we are experiencing.”
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