The European Bank Management Committee said it will stop raising interest rates in the summer Goldman Sachs expects to be 100 basis points away from the terminal interest rate
News from the Financial Associated Press, February 21 (Editor Zhao Hao)On Monday (February 20), local time, European Central Bank Governing Council and Finnish Bank President Olli Rehn told the media that the European Central Bank is now close to a restrictive policy stance and may stop raising interest rates this summer.
Since the start of the interest rate hike process in July last year, the European Central Bank has raised interest rates five times in a row to curb inflation, raising interest rates by a total of 300 basis points. Currently the bank’s main refinancing rate, marginal lending rate and deposit facility rate are 3.00%, 3.25% and 2.50%, respectively.
Rennes: Terminal rates to be reached in summer
Wren said underlying price pressures had begun to show signs of stabilizing, but he believed the currentInflation remains too highfurther interest rate hikes are needed to ensure a return to the central bank’s 2% inflation target.
At the beginning of this month, the report released by Eurostat showed that the inflation rate in the euro area in January – the Harmonized Consumer Price Index (HICP) recorded an annual rate of 8.5%, lower than the 9.2% in December last year, and slowed down for three consecutive months.
(Eurozone Harmonized Consumer Price Index annual rate) “In such a high inflation environment, it is possible, reasonable and appropriate to continue raising interest rates after March, and willTerminal rates reached in summer. “We also shouldn’t rush to start discussing when to cut rates,” Wren added. “
He also said the euro zone economy was likely to avoid recession and that growth of around 1 percent this year was “realistic.” Beyond that, wage growth in the region has picked up, but mostly as compensation for past declines rather than expectations of higher inflation going forward.
Data shortly before press time showed that consumer confidence in the euro zone rose to -19 in February from -20.7 in January, the highest level in almost a year, pointing to the resilience of the bloc and growing confidence that it can escape a recession this year .
Goldman Sachs expects 100 basis points from terminal rates
Wren said: “So far, I have not seen an obvious ‘wage-price spiral’ phenomenon. After that, we will continue to pay close attention to the development of wage data, and if necessary, we will take more forceful actions.”
The homepage of the official website of the European Central Bank also shows that Schnabel, the executive member, emphasized in an interview that “it is too early to declare victory.” In view of her tough stance, Goldman Sachs, the top US investment bank, raised its forecast for the terminal interest rate of the European Central Bank from 3.25% to 3.5%.
Goldman Sachs predicts that the European Central Bank will complete the last rate hike in June, raising the interest rate of the deposit mechanism from the current 2.5% to 3.5%, that is, there is still 100 basis points away from the terminal interest rate.
Goldman also added that a 50 basis point rate hike by the ECB in May “remains a possibility” but currently sees a 25 basis point hike as more likely.