04 May 2023
If you are covering the latest ECB interest rate decision please see the following comment from Richard Carter, head of fixed interest research at Quilter Cheviot:
“As had been widely anticipated, the European Central Bank has taken its foot off the pedal slightly with a 25bps rate hike.
“While the ECB appears to be slowing the pace from here by breaking its more aggressive pattern of 50bps hikes, it remains a little behind the curve on rate rises compared to its US counterpart and will no doubt be concerned about potential sticky inflation. The Fed indicated that yesterday’s hike could be its last for the time being, but this is almost certainly not the case for the ECB.
“The most recent inflation figures show it remains too high for comfort and progress back down towards the ECB’s 2% target is slow, with core inflation dipping very slightly to 5.6% in April from 5.7% in March. What’s more, recent growth data has been relatively robust, and the ECB is therefore expected to remain on its path of further rate hikes in its fight against inflation – albeit at a slightly slower pace – for as long as it deems necessary.
“This remains a tense period for the ECB, and unless inflation falls swiftly this year the bank could find itself in a very tricky spot as the struggling finance system will no doubt impact economic growth while inflation remains stubbornly high."
