Rising inflation in France and Spain, among others, is driving up interest rates on government bonds. For example, the Dutch 10-year interest rate has risen above three percent for the first time in more than eleven years. Analysts are factoring in that the European Central Bank will raise interest rates to nearly four percent, the highest level ever.
It was announced today that inflation in France and Spain rose by 7.2 and 6.1 percent respectively, while a decline was expected. Although inflation has declined in Belgium, core inflation excluding energy and food has increased.
Germany is due to release new inflation data on Wednesday and data for the Netherlands and the Eurozone will be announced on Thursday. According to BNR’s in-house economist Han de Jong, it is possible that the Netherlands will follow the example of France, Spain and Belgium.
more aggressive
Now that inflation is on the rise again, the ECB should pursue a more aggressive interest rate policy. European Central Bank President Christine Lagarde will announce a new interest rate decision on 16 March. The ECB is expected to raise interest rates by 50 basis points to 3%. Earlier this year, financial markets still assumed that the key interest rate would not exceed 3.5%, but now it is 4%, writes FD.
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.
