Indice
Russia interest rates in an economy blunted by inflation
With inflation (8.1%) four times higher than the ECB's target of 2%, the European Central Bank announced the end of Quantitative Easing and a rate hike of 25 basis points in July, the first in 11 years.
This leaves open the Possibility of a 50 basis point increase in September Should inflation show no signs of slowing down.
On the other hand, it appears that markets are betting on a 150 basis point increase by the end of the year, which would mean two 50 basis point increases and two more 25 basis point increases in the next four meetings.
The new estimates released by the ECB see inflation at 6.8% in 2022, 3.5% in 2023 and only in 2024 approaching the 2% target. On the other side GDP estimates were reduced to +2.8% and 2.1% in 2023 and 2024.
Also cutting growth forecasts is the OECD.
Rate increase and the reaction of the markets
| How did the markets respond to the rate hike? Major Old Continent stock markets close the week down sharply. Italian stock market loses over 6%, the German one fares no better, leaving the 5% on the ground. Worrying investors is a possible recession that could affect Europe. Lo Spread between BTP and BUND reaches 235 points. All eyes are now on the next inflation figure, due out later this month. |
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