While inflation is now rampant I doubt very much the ECB would be hiking rates at this level, it would kill the meagre economic growth forecasts ,but these are not normal times and while 50bps are already factored in the effects of that will take time to filter through.Hi all.
I read this article on Reuters the other day, that the ECB could potentially have three further rate hikes of 50bp each before the end of the year:
New ECB tool allows three big rate hikes in 2022-Deutsche Bank
The European Central Bank's decision to create a new tool to contain strain in euro area bond markets paves the way for it to deliver three, 50 basis point interest-rate increases this year, according to Deutsche Bank.www.reuters.com
It appears this refers to the "Deposit facility" rate.... if this actually happens though, does anyone know if it's the likely that the "fixed rate tenders" rate that the trackers follow would also move to the same degree? If this is the case, trackers could quickly have 1.75% added to the current margin very quickly, which is a bit unsettling.
Thanks.
While inflation is now rampant I doubt very much the ECB would be hiking rates at this level, it would kill the meagre economic growth forecasts ,but these are not normal times and while 50bps are already factored in the effects of that will take time to filter through.
To be balanced, I don't any party is in favour of a depression as that will be a function of runaway inflation rather than higher interest rates. I do agree that a period of no, or low negative, growth is the target... the unknown is how poorly the central banks manage their future interest reactions to that economic risk when is arisesUS 30 year treasuries are yielding something like 3.2% and 30 year mortgage rates are 6%. All Central Banks want to ensure their currency doesnt depreciate importing inflation therefore the ECB has no choice but to tighten to slam the breaks on and push the economies into recession and possibly depression
The first ECB rate hike hasn't happened yet to the best of my knowledge.
ECB have stated very clearly that there will be a rate increase in July, September and a 3rd before the end of the year. So its effectively gospel at this point. July will be minimum 0.25%, some are suggesting 0.5%. September seems to be odds on for 0.5%."Further ECB rate hikes before the end the year..."
The first ECB rate hike hasn't happened yet to the best of my knowledge.
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