The European Central Bank is set to raise interest rates again and pencils in more hikes for the next few months, with the only open question being how big these will be. | Reuters
But ECB President Christine Lagarde is certain to face questions about smaller rises from next month after the U.S. Federal Reserve slowed the pace of its own hikes on Wednesday and some data pointed to a bleaker outlook for the euro zone.
But doves like Greece’s Yannis Stournaras and Italian board member Fabio Panetta have argued for smaller moves, or at least for the ECB to refrain from making commitments for March.
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.to peak at 3.5 percent by the summer, which would be the highest level since the turn of the century.
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