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Here We Go Again, ECB Rate Increase Still Not Inevitable

The European Central Bank said there is no chance to cut interest rates again. The ECB may need a significant rate hike in March and accelerate the rundown of the bond portfolio. This is all related to the economy and high inflation.

Bundesbank President, Joachin Nagel, said that the European economic conditions forced the ECB to take firm follow-up steps. The ECB has raised around 300 points.

But until now, we are still fixated on strengthening interest rates again because of inflation which continues to rise. Some policymakers say that the ECB is done with raising interest rates. But Nagel pushed back on those calls and said price growth was at risk.

It could also be stuck above the ECB's 2% target. So it is essential to look for the necessary afterwards. The market now expects the 2.5% deposit rate to peak at around 4% near the turn of the year.

So this suggests another 100 basis points of hikes after much. The ECB is now quite confident that inflation will return to target, but there is still a long way to go to get it done.


ECB Rate Pressure Grows Due to Inflation Data in Eurozone, and ECB Starts Running Down Massive Bond Holdings

Markets are currently thinking that the European Central Bank must raise the interest rate to a record high of 4% to make headway in crushing inflation that will allow them to reduce inflation up to its target, which is around 2% shortly.

The essential central banks, such as the ECB, are trying to combat a crashing economy. The difficulty of ECB then continues the annual consumer price inflation according to economists' targets. In recent months, core inflation has indicated a weak economic sector.

Furthermore, it is clear that inflationary pressure still sticks around. In the next 12 months, it remained elevated from a historical perspective. And ECB President Christine Lagarde also knows the hawkish stance related to core inflation.

The prospect of a higher interest rate is considered suitable for bank earnings. The euro is down about 1.5% for the year versus the US Dollar, as is the prospect of a higher interest rate doing little to support a single currency.

The ECB should start smoothly to get substantial bond yields amidst these conditions. The ECB will this month start running bonds off its balance sheet this.

Traders are optimistic about creating a slight pace of bond sales and structured economy conditions in a structured state. The main focus continues to be on rate rises, which is the ECB's primary PCIe tool.

This could make economic and monetary conditions the highest since 1999. The monetary policy committee is poised to kick borrowing costs of per cent to tame stream inflation. And then users of the shared euro currency encourage that the Euro economy is well driven.

Big Rate Hikes Beyond March Also Influences Euro Zone Factory Growth and Shares This Month

The European Central Bank may need significant rate hikes beyond March. It should accelerate the rundown of the portfolio to tame the stubbornly high inflation.

The ECB has raised by 300 basis points since July, and it is very likely that there will be a big move in March. The market now expects the 2.5% deposit rate to peak at around 4% near the turn of the year.

Once the peak rate is, market conditions remain high, so the European Central Bank is confident that inflation will return to 2%. So the current scheme defines factories and shares in the Euro market.

The banks are now working on the economic conditions they want. From inflation to the movement of the euro currency, officials and investors always see it. The bond market is so significant for the eurozone factory and shares that the bank rate increase is not inevitable.




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