Emphasis continues as long as needed
The final stages of the ECB’s interest rate hike are the focus, with core inflation subdued and underlying price pressures stubbornly increasing. Most economic analysts expect central bank officials to temporarily stop raising interest rates after next month’s meeting after the deposit rate reaches 3.75%, although money markets expect rates to peak around 4% later this year.
Monetary Fund: Inflation in the euro area calls for monetary tightening
“Policy makers should now prioritize making it clear that they have many options on the table and that they will continue to raise interest rates if needed,” Seth Carpenter, chief global economist at Morgan Stanley, told Bloomberg TV. “I don’t see any in the near term. An opportunity to declare victory over inflation.
One important question is how quickly the impact of belatedly high interest rates will spread to the economy.
Lagarde added: “Determining the actual strength of the spread of the effect of increasing interest rates will determine the results of raising them by a specific percentage on the inflation rate, and this will be reflected in the expected course of monetary policy. The early results of monetary tightening are evident in sectors that include manufacturing and construction, which are the most sensitive to changing interest rates.”
2023-06-27 19:29:20
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