The ECB raised rates by 75 basis points. But other rate hikes will be necessary to counter inflation that continues to worry the central bank.
The Paris Stock Exchange sinks, the ECB worries about the evolution of inflation | Photo credit: Shutterstock
Almost stable during the publication of the ECB press release, the Paris Stock Exchange sank in the middle of the afternoon, the Cac 40 yielding 0.75%, at 6,060.33 points. The Central Bank has, unsurprisingly, opted for the strong method by raising its key rates by 75 basis points, the refi being raised to 1.25%.
But it continues to worry about the evolution of inflation, whose forecasts were also revised upwards during this September session. The central bank now expects inflation to average 8.1% this year in the euro zone, compared to 6.8% forecast in June. The forecast for 2023 is raised to 5.5% and that for 2024 to 2.3%, therefore still above its target set at 2%.
During her press conference, Christine Lagarde, the president of the ECB, did not fail to point out that further rate hikes will be necessary to counter the current strong surge in prices. On this front, the risks remain tilted to the upside, with initial signs of anticipation above the central bank’s objective requiring strong monitoring.
More details to follow shortly.