The European Central Bank is set to raise interest rates again on Thursday and pencil in more hikes for the next few months, with the only open question being how big these will be.
has been in rapid decline since peaking at a record 10.6% in October but core prices, which exclude volatile items such as food and fuel, have been rising at a steady or accelerating pace.growth in the final three months of 2022 but this was largely due to an exceptionally mild winter and a stellar performance by Ireland.
And an ECB survey showed banks were tightening access to credit by the most since the 2011 debt crisis - usually the harbinger of lower growth and slowing inflation."In an environment with so many exogenous influences, forward guidance would be a recipe for disappointments that could ultimately weigh on the credibility of the ECB," Karsten Junius, chief economist at J.Safra Sarasin, said.
Financial markets expect the ECB's deposit rate to peak at 3.5% by the summer, which would be the highest level since the turn of the century. The ECB is also set to reveal how exactly it plans to reduce the multi-trillion euro stock of bonds on its balance sheet, unwinding some of the asset purchases it made to boost inflation during almost a decade when it was too low.
Barclays analysts estimate that 60 billion euros worth of maturing bonds the ECB will not replace between March and June will be split roughly evenly between government bonds and other debt, comprising corporate and covered bonds as well as asset-backed securities.
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