It looks like the European Central Bank (ECB) will raise interest rates a little less aggressively next month. According to the Bloomberg news agency, politicians would aim for an increase in interest rates by 0.5 percentage points. However, during the last two ECB interest rate meetings, it was decided to raise interest rates by 0.75 percentage points consecutively.
The reason for a less aggressive increase would be, among other things, the growing risk of a recession. There is also the possibility that pressure on consumer prices will ease. Another factor is that an increase in the deposit rate by half a percentage point to 2% will approach a so-called neutral level. That level would no longer stimulate the economy. The need to negotiate an initial budget reduction was also mentioned.
Some politicians would still like to see interest rates hiked by 0.75 percentage point next month to curb inflation. But according to the sources, that will only happen if, for example, inflation rises surprisingly further. With four weeks to go until the ECB’s next interest rate decision on Dec. 15, officials still have plenty of time to make a decision. The inflation rate on November 30 will play a big part in the decision.
The highest inflation since the introduction of the euro
Inflation in the eurozone is currently 10.7%. This is the highest level since the introduction of the single currency. Inflation is expected to remain elevated until at least the first half of next year.
Source: BNR
Andrew Dwight is an author and economy journalist who writes for 24 News Globe. He has a deep understanding of financial markets and a passion for analyzing economic trends and news. With a talent for breaking down complex economic concepts into easily understandable terms, Andrew has become a respected voice in the field of economics journalism.
