The central bank plans to stop buying bonds under its quantitative easing program in the third quarter of the year, and economists expect it could start raising interest rates by from their current negative level by the end of 2022.
Anna Stupnytska, an economist at Fidelity International, said the ECB will soon have to worry more about growth than inflation as the continent faces a recession.
She said: “The recession in Europe is already our base case, but its depth and duration crucially depend on the nature of the new sanctions against Russia. As a total energy embargo becomes more likely, so does the worst-case scenario of a recession.
“We believe that as the growth shock becomes more evident in the data over the coming weeks, the ECB’s attention will likely shift away from high inflation to try to limit economic distress and the market as the invasion of Ukraine and its aftermath continues to ripple through the system.”
She expects the ECB to start raising interest rates only in late 2022 or early 2023, rather than this summer as financial markets currently expect.
Its overall deposit rate currently stands at minus 0.5 pc.
The Bank of England has raised its base rate three times so far, to 0.75%, while the US Federal Reserve began to tighten with an increase last month.
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Source: www.telegraph.co.uk
This notice was published: 2022-04-14 14:22:28
