The Council of the European Central Bank (ECB) today announced a further increase in interest rates by 25 basis points, leaving the reference rate at 4.5% and the deposit facility at 4%.
Today’s meeting had sparked disagreements among analysts who questioned the path taken by the panel chaired Christine Lagarde. After learning of the decision, these are some of the first reviews.
“The most surprising thing about this decision was the lack of consensus, as the ECB has always tried to signal all its moves to control volatility,” he concluded XTB.
The division within the institution has been highlighted by several experts in recent days. The conclusion, e.g Anna Stupnytska global macroeconomist Fidelity International that “the ECB’s instinct to fight inflation has prevailed over concerns about deteriorating growth.” As he explains, in the end “the still high momentum of underlying inflation, combined with the rise in oil prices – which entails upside risks for general development – had more weight.”
Next Steps
This expert believes that today will “probably” be the last rise of this cycle. “From now on, market attention will focus on how long interest rates will remain at these restrictive levels,” Stupnytska added.
They have been collapsing ever since Janus Henderson Investors in calling the increase cycle “complete,” “judging by the language of the statement and the reduction in medium-term inflation estimates.” Robert Schramm Fuchs Portfolio manager from the manager’s European equities team, believes investors should “expect a long plateau” and stresses that equity markets have historically “enjoyed the last rise in interest rates of a cycle, regardless of whether a recession followed or not.”
At the same time, Orla Garvey Senior Fixed Income Manager Federated Hermes states emphatically: “It is clear that the ECB wants to end the hikes now, and the growth data probably confirms this.” “However, there are still some hurdles to overcome before the end of the year, particularly with regard to energy prices,” he warns.
