The ECB assumes a rate hike before the end of 2022

Posted on April 26, 2022 During the past week we have seen how several members of the ECB showed their willingness to start the process of increases, even at the July meeting if necessary, based on inflation data. The prevention of decoupling in time the end of the purchase program from the start of rate hikes has been diluted, since a return to positive/zero rates is taken for granted even in September of this year. The president of the entity, Christine Lagarde, reflected the importance of the meeting on June 9 in which the end of asset purchases and eventually a possible rate hike schedule will be decided. Lagarde stated that there is a high probability that the first interest rate hike in the Euro Zone since 2011 will come before the end of the year. She also commented that the end of the ECB’s debt purchase program should end at the beginning of the third quarter of 2022, in her opinion. On the other hand, Lagarde showed her concern about the evolution of the exchange rate and its impact on inflation. Analysts are already predicting that it will be difficult for the ECB not to react earlier than initially expected given the path and positioning of the FED. Regarding the macro data in Europe, the preliminary data of the PMI composed of the Eurozone in the month of April was 55.8 points, above the data estimated by analysts (53.9 points) and the data of the previous period ( 54.9 points). This indicator marked the highest level in seven months, highlighting the expansion of the services sector in the face of the slight weakness of European industry that affects the manufacturing sector. The services sector benefits from this recovery, collecting good activity data, pushed by the end of restrictions due to the pandemic. In the United Kingdom, data around 60 is expected and, in addition, the activity indices are holding up better than the sentiment indicators, which have fallen. Consumer confidence data shows a small improvement in April, although a global view will have to be taken when the employment and expectations data are published. In France, Emmanuel Macron managed to revalidate his current position as president of the country for another five years by defeating Marine Le Pen in the second round of the French presidential elections. INFORMATIONTitleThe ECB assumes a rate hike before the end of 2022DescriptionDuring the past week we have seen how several members of the ECB showed their willingness to start the rate hike process, even at the July meeting if necessary, depending on the data of inflation. Author GLOBALCAJA

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