ECB Chief Economist Philip Lane believes a 25 basis point rate hike in July is reasonable, but he emphasizes that it is too early to predict what will happen in September. He asserts that the central bank is committed to bringing inflation back to target and that this will require maintaining restrictive rates for a sustained period.
While the ECB raised interest rates by 25 basis points in June and is expected to do so again in July, there is uncertainty regarding the future course of action. The central bank aims to strike a balance between combating inflation and avoiding excessive economic slowdown.
Given GQG PartnerLane’s comments suggest a preference for a gradual tightening of monetary policy. However, they are also ready to act more decisively if necessary. The market will closely monitor the ECB’s decision on rate hikes in September. This decision will offer insights into the central bank’s plans for the rest of the year.
In September, the European Central Bank (ECB) may choose to increase interest rates. If they decide to do so, the rate hike will probably be 25 basis points. However, if indications of an economic slowdown start to appear, the ECB might decide to pause its tightening cycle. The final decision will also take into account the inflation outlook.
If inflation continues to rise persistently, there will be pressure for more aggressive rate hikes. On the other hand, if inflation falls, a more cautious approach to rate hikes might be warranted.
The ECB’s next monetary policy meeting is scheduled for July 21.
