27 October 2022
If you are covering the latest ECB interest rate decision, please see the following comment from Marcus Brookes, chief investment officer at Quilter Investors:
“We have now seen successive 75 basis point interest rate increases by ECB. Having been a rate hike laggard, the ECB is now taking strong action to halt soaring inflation. This latest hike follows a 75 basis point increase in September and 50 basis points increase in August, bringing the rate to its highest for more than a decade.
“It comes as little surprise as the eurozone looks to tackle bloating inflationary pressures, with its annual inflation rate rising to 9.9% last month. Like all central banks, the balancing act faced by the ECB continues to be a tricky one. The bloc is faced with inflationary shock that requires decisive action, yet Russia’s ongoing war in Ukraine continues to cast a shadow of uncertainty over Europe that could end with weak demand and recession.
“While the further increase will be another welcome boost for banks and savers, it will not solve pressures on households brought about by the energy crisis. Furthermore, as the ECB raises interest rates to fight rampant inflation, sovereign debt dynamics will continue to deteriorate, and we need more on measures to be deployed to reduce the risk of another sovereign debt crisis."
