Aberdeen: Another ECB interest rate rise is coming in December
Felix Feather, Economist at Aberdeen, comments on today’s ECB interest rate decision:
'The ECB's decision to raise interest rates by 25 basis points to 2.5% was widely anticipated. More important than the move itself is that the ECB has used this meeting to acknowledge a stronger economy and a more persistent inflation outlook than it expected just a few months ago.
The updated forecasts are telling. The eurozone has proved remarkably resilient despite higher energy prices and geopolitical uncertainty, leading policymakers to revise growth expectations higher. At the same time, inflation forecasts have also moved up, reflecting elevated energy costs and concerns that inflation could remain above target for longer.
Taken together, today's decision signals a Governing Council that is becoming less confident that 2.5% is necessarily the end point of this cycle. Rather than signalling the end of tightening, the wording of the decision’s summary left the door open to further rate increases if inflation pressures fail to moderate. We expect the ECB to hike again at its December meeting.'
