27 July 2023
If you are covering the ECB’s decision to raise interest rates by 25bps, please find below a comment from Marcus Brookes, chief investment officer at Quilter Investors:
“Unsurprisingly, the European Central Bank has once again raised interest rates as it seeks to keep the pressure on pushing down the rate of inflation. This is now a joint record high for the ECB, and the highest level since 2001. Unfortunately for the ECB, it is far behind the likes of the US in its battle and as such we are likely to see rates continue to go up for the rest of this year. We are likely to see the record breached at the next meeting.
“Ultimately, while it has said that its actions will be dependent on the data, it also wants lending conditions to be sufficiently restrictive. We are seeing economies beginning to buckle under this strain. Germany, for example, is facing a recession, while growth in other countries is grinding to a halt. Further rate rises will have an impact and it will be difficult to bring economic growth back quickly without risking another inflation spike. As with most monetary policy actions around the world, the ECB is walking a tight rope and will be for a considerable time to come. The uncertain nature of the economic recovery means quality is a crucial factor for investors.”
