After European Central Bank (ECB) frontwoman Christine Lagarde indicated that at least two more interest rate hikes are expected, ECB bankers are backing that expectation. “Given what we know now, that means yesterday’s rate hike won’t be the last,” said board member Madis Muller.
According to Muller, the steps are necessary to be “reasonably confident that price increases will steadily moderate to a 2% inflation rate for a reasonable period of time.” Muller’s colleagues also support the expectations. That board members support raising interest rates by 25 basis points is in line with Lagarde’s statement, who said the ECB’s decision was almost unanimous. There are, however, some bankers who wanted a steeper 50 basis point hike.
Stricter policy
However, Bloomberg reports that those bankers did not put up any strong resistance to the decision. The deal is said to have been carried out in part because a tighter fiscal policy was promised. Reinvestments would also be blocked asset purchase program of the ECB.
Most economists, including those at Goldman Sachs and Morgan Stanley, are following Lagarde and now expect two more rate hikes. ING and Commerzbank expect only one, while Danske Bank expects the ECB to raise its deposit rate from 3.25% to 4%.
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.
