简体中文
繁體中文
English
Pусский
日本語
ภาษาไทย
Tiếng Việt
Bahasa Indonesia
Español
हिन्दी
Filippiiniläinen
Français
Deutsch
Português
Türkçe
한국어
العربية
Abstract:The European Central Bank will go for another jumbo 75 basis point increase to its deposit and refinancing rates when it meets on Oct. 27 as it tries to contain inflation running at five times its target, a Reuters poll found.
As in much of the world, euro zone inflation has soared on skyrocketing energy prices and supply chains still healing from the coronavirus pandemic have taken a further hit from Russias invasion of Ukraine.
The ECB targets inflation at 2.0%, yet it was 10.0% last month. It will average at a peak of 9.6% this quarter, higher than thought last month, before gradually drifting down but will not reach target until late 2024, the poll found.
“Inflation is far too high. Rapid rate rises are needed. However, the ECB also needs to keep an eye on bond spreads, so more than 75bps seems unlikely,” said Brian Martin at ANZ.
Much of the price pressure is coming from energy costs. With no end in sight to the Russia-Ukraine conflict, nearly 65% of 34 respondents said the cost of living in the euro zone would worsen or worsen significantly. Only 12 said it would improve.
“The worst impact of the energy crisis on the household sector will develop in Q4 2022 and Q1 2023, when the demand for gas is seasonally higher,” said Luca Mezzomo at Intesa Sanpaolo. (Graphic: Reuters Poll – Euro zone economic outlook, https://fingfx.thomsonreuters.com/gfx/polling/zjpqkxrzbpx/Reuters%20Poll%20-%20Euro%20zone%20economic%20outlook.PNG)
In the run-up to winter, forecasters are expecting the ECB to be more aggressive in tightening policy.
The blocs central bank will take the deposit rate to 1.50% and the refinancing rate to 2.00% next Thursday, a view held by an overwhelming majority of respondents in the Oct. 12-18 Reuters poll of more than 60 economists.
Three-quarters of respondents to an additional question, 27 of 36, said the bank ought to choose a 75 basis point lift to the deposit rate while two said it should go harder with a 100 basis point increase. Only seven recommended 50 basis points.
The ECBs first increase did not come until July, when it added 50 basis points to all its rates – taking the deposit rate to zero, its first time not in negative territory since 2014 – and followed that up with a 75 basis point lift in September.
That was slow compared to peers like the United States Federal Reserve, which has contributed to a fall in the euro to below parity to the U.S. dollar.
By year-end the deposit and refinancing rates were forecast to be at 2.00% and 2.50% respectively compared to 1.25% and 2.00% predicted in a September poll.
The deposit rate was expected to reach a peak of 2.50% next year and the refinancing rate 3.00%, higher than the 1.50% and 2.00% highs given in September. The highest forecast was for them to reach 4.00% and 4.50%.
The ECB has promised more hikes and begun a debate about unwinding its 3.3 trillion euros ($3.25 trillion) of bond purchases – the legacy of its fight against deflation in the last decade.
Two hawks on the ECBs Governing Council called last week for more hikes to fight runaway price rises. But the central bank is also facing a recession in the bloc and economists in the poll gave a median chance of 70% of one within a year.
Asked what type of recession it would be, 22 of 46 respondents said it would be short and shallow while 15 said it would be long and shallow. Eight said it would be short and deep and only one said it would be long and deep.
The economy was expected to grow 3.0% this year but flatline in 2023 before returning to growth in 2024 and expanding 1.5%. In Septembers poll those forecasts were 2.9%, 0.4% and 1.6%.
Disclaimer:
The views in this article only represent the author's personal views, and do not constitute investment advice on this platform. This platform does not guarantee the accuracy, completeness and timeliness of the information in the article, and will not be liable for any loss caused by the use of or reliance on the information in the article.
eToro strengthens its Australian market presence with the $80M AUD acquisition of Spaceship, expanding its long-term savings and superannuation offerings.
OANDA Japan Inc., a subsidiary of the global online broker OANDA Corporation, has announced the termination of its Tokyo Server MT4 Discretionary Plan. The broker has notified its clients that the plan will no longer be available after December 13, 2024, marking a shift in the company's services for clients using the MetaTrader 4 (MT4) platform in Japan.
In the midst of the 2021 crypto and NFT boom, celebrities flocked to the burgeoning market of digital assets, promoting Non-Fungible Tokens (NFTs) as the next big thing. Fast forward to 2024, the glitter has faded, and many celebrity-endorsed NFTs have lost their allure. The question remains: what happened to celebrities’ NFTs, and why should this serve as a stark reminder for everyday investors?
Updated forex analysis shows USD weakness, focusing on key levels like EUR/USD, DXY bearish trend, and pivot points for major currency pairs.