Expert expects the ECB to raise rates again before the end of the year, but this time the increase would be 50 basis points
The European Central Bank (ECB) It has raised all three key interest rates by 75 basis points (bps), the strongest upward move in its entire history. The objective of this increase is to curb uncontrolled inflation, cooling the economy with tougher financial conditions.
Konstantin Veit, portfolio manager at PIMCO, explains in his latest report following the decision of the European Central Bank of raising interest rates by 75 points (the strongest hike in history), that this is only the beginning. The expert believes that in October and December he will repeat the measure but this time only with 50 basis points.
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The ECB has decided to act forcefully to try to curb inflation that stood at 9.1% in August, the highest in the history of the euro zone. The CPI within the euro zone is somewhat diverse, with countries such as France that barely present 6% year-on-year and others such as the Baltics that exceed 20% inflation. In the case of Spain, inflation is at 10.4%. Despite the inflationary shock, there was no consensus on raising rates.
Commerzbank economists note in a comment that “the ECB has today sent a clear signal by raising the reference interest rate by 75 basis points. In addition, the ECB has opened up the possibility of new major rate hikes due to high inflation.
