A re-evaluation of its strategy is being carried out by European Central Bank, which expected to be delayed the final increase in interest rates until December. Objective remains the holding back inflationary pressures triggered by the Middle East war fighting, according to economic analyst estimates.
According to a poll by Bloomberg, the majority of analysts predict that the Governing Council of the ECB will maintain interest rates unchanged At the next meeting at the end of October, transferring increase in the deposit rate to 2.75% for the last meeting of the year. This development marks an amendment to previous estimates, as until earlier the 25-point increase in September was considered the highest point of the current tightening cycle.
The change in attitude is due to the recent ejecting oil prices and gas. At the same time, revision of ECB upward inflation forecasts strengthens estimates that further consolidation of monetary policy is needed for the achieving the 2% target. For their part, markets discount at least Three more increases.
Sources with knowledge of processes indicate that both ECB officials They consider it possible to increase interest rates further, but without having reached a specific timetable. The Governor of the Central Bank of Ireland, Gabriel Mahluf, told Bloomberg Television that in periods of increased uncertainty "Every meeting includes all possible".
As for the next day, the economic analysts involved in the investigation estimate that interest rates will remain stable at 2.75% until December 2027, when the ECB is expected to launch the monetary relaxation cycle .
Boris Vwich: ECB not only examines energy prices
Market stakes for further increases in interest rates by the European Central Bank (ECB) are largely powered by higher energy prices, but policy makers will consider a much wider range of economic indicators when making their subsequent decisions, told Reuters new ECB vice president Boris Vucic.
Investors have intensified their expectations of interest rate increases by the ECB since the central bank increased lending costs last week, as the escalation of the Middle East conflict has led to a rally of energy prices.
Vucic, a member of the Governing Council of the ECB, seemed to mitigate these expectations, clarifying that one should not focus solely on oil and gas prices as the only factors defining monetary policy.
"The formation of interest rate expectations is determined primarily by rising energy prices," he said in an interview he granted Wednesday.
"What I want to stress is that we are not just looking at energy prices, but a much wider set of data and criteria when making monetary policy decisions. It would not be wise to focus exclusively on energy prices, however important they are," he added.
"What I want to stress is that we are not just looking at energy prices, but a much wider set of data and criteria when making monetary policy decisions. It would not be wise to focus exclusively on energy prices, however important they are," he added.
Vuicic, who was the commander of Croatia's central bank before taking over the position of ECB vice president in June, said that persistently high energy prices can not only boost inflation, but also weaken growth, pushing household incomes and spending.
"If inflation remains high during autumn and affects household incomes and consumer behaviour, this will also have a negative impact on GDP," he said.
A heavy winter would exacerbate this impact, increasing the heating bills, he added.
At the same time, he noted that the Eurozone has reduced its dependence on natural gas over the last four years, which makes low stock levels less threatening compared to the Russian invasion period in Ukraine in 2022.
Furthermore, the economy proved to be more durable than expected thanks to exports and private consumption, which is expected to remain "pretty stable," he said.
The ECB increased its basic interest rate from 2.0% to 2.50% in two steps: June and September, a rhythm that Vuisic said is worth maintaining "for now".
"We will see what happens in the coming months and adapt our policy accordingly," he added.
Financial markets predict another three or four increases by the end of next year, with the next likely coming in October. This will lead the deposit rate to 3.25% or 3.50%.
The ECB has described an interest rate of over 2.50% as restrictive of economic growth.
Vuisic said the ECB should not focus too much on such labels, but "to assess which level of interest is appropriate at a given point."
It also opened the door to increasing bank reserve requirements in order to reduce liquidity somewhat.
"When surplus liquidity is created, particularly as great as we have done in the past, reserve requirements allow us to remove part of it in a simple and economic manner," he noted.
Commenting on the recent rally of government bond yields due to higher expectations of inflation and interest rates, as well as the major borrowing needs of governments and technology companies, Vucic said these movements are not a threat to financial stability, because eurozone banks are well capitalised and equipped with liquidity.
But he added that governments should keep public finances under control.
"Over time, if inflation expectations are reduced, we could see an appreciation, but responsible fiscal policy by governments remains an essential part of the puzzle in the long term," he noted.
Zigman warning about inflation
The danger bell for the inflation has struck the board member of the European Central Bank, Come on, Zigman., stressing that the ECB must fully control prices as otherwise the economic growth of the euro area is threatened.
In his first interview with an international media agency since taking office in June, the commander of Central Bank of Croatia told Bloomberg Television that the stronger of expected growth in the second quarter requires the commitment of officials to retreat of the index —That right now exceeds 3%— towards the 2% target.
"There is high optimism for growth, but we must focus on inflation, as it can ultimately undermine economic activity itself," he noted.
Having already moved on to second interest rate increaseThe ECB shall weigh its next steps . At the same time, the new ejecting of oil and gas prices leads analysts to the assessment that inflation can approach 4% in the coming months, although the eurozone economy is currently showing resistance to turbulence from geopolitical developments in the Middle East.
Οι αγορές τιμολογούν τουλάχιστον τρεις ακόμη αυξήσεις στο επιτόκιο αποδοχής καταθέσεων από το σημερινό 2,5%, εξέλιξη που θα το οδηγούσε αισθητά πάνω από το λεγόμενο “ουδέτερο επίπεδο” — εκεί δηλαδή όπου το κόστος δανεισμού ούτε ενισχύει ούτε φρελάρει την οικονομική δραστηριότητα.
Την ώρα που στελέχη όπως ο πρόεδρος της Bundesbank, Γιοακίμ Νάγκελ, τάσσονται υπέρ μιας ελαφρώς περιοριστικής νομισματικής πολιτικής, άλλα μέλη, όπως ο Πιέρο Τσιπολόνε του Εκτελεστικού Συμβουλίου, προειδοποιούν κατά μιας υπερβολικής σύσφιγξης.
On his part, the κ. Ζίγκμαν argued that η ΕΚΤ δεν πρέπει να αναλώνεται στον ακριβή προσδιορισμό του ουδέτερου επιτοκίου: “Αυτό που προέχει για εμάς, και ειδικά για εμένα προσωπικά, είναι να τεθούν υπό έλεγχο όλοι οι δείκτες τιμών”.
