Fidelity International: ECB kiest voor inflatiebestrijding
Anna Stupnytska, Global Macro Economist at Fidelity International, comments on today's ECB rate hike:
'Today's rate decision was a very close call and in the end the ECB's inflation fighting instinct won over concerns about the deteriorating growth picture. The still elevated momentum of core inflation, combined with higher oil prices posing upside risks to the headline trajectory, have meant that the ECB could not afford to wait and see what happens until the next meeting. With what is very likely to be the last hike of this cycle now out of the way, the ECB is now going into wait-and-see mode, while still preserving optionality.'
'From now, the focus for markets will shift to how long rates will be kept at these restrictive levels - this will of course depend on the inflation and growth trajectory from here. In the press conference, Christine Lagarde stressed the ECB's determination to set interest rates at 'sufficiently restrictive levels for as long as necessary'.
With the monetary policy transmission channel clearly working forcefully, a Euro area recession is looming on the horizon. As a result, the ECB might have to execute a fast course correction in 2024, but for the time being their guidance is likely to focus on the 'higher-for-longer' scenario.'