The minutes of the June ECB meeting released last week confirmed that its monetary tightening process is still not over, “the 25 basis point interest rate hike has received very broad consensus support, and some voters even proposed to raise the key interest rate of the European Central Bank by 50 basis points.” Basis point recommendation, because the ECB may face the risk of persistently high inflation in the euro zone.”
In addition, the minutes also show that “although the ECB voters believe that the second consecutive decline in the core inflation rate is a positive signal, the policymakers generally believe that there is not enough or convincing evidence to confirm the arrival of the turning point.”
Although the minutes of this meeting showed that the ECB voters finally agreed to follow the “data-based” and “meeting-by-meeting choices” approach to make interest rate decisions after the July meeting, but it seems that European inflationary pressures are higher than the current U.S. Look bigger, and this may support the ECB to be more hawkish after raising interest rates.
So this may support the euro to maintain a relatively high level.
In addition, Bloomberg’s recent survey of economists shows that most economists expect the European Central Bank to raise interest rates to a peak level of 4% in September. rate hike.
Economists surveyed by Bloomberg had only predicted that the ECB deposit rate would reach a peak level of 3.75%.
Behind this shift in view is a potential deterioration in the outlook for inflation in the euro zone.
While the rise in inflation in the euro zone may slow in the coming months, it will not be as fast as previously expected by the market.
What’s more, economists surveyed now see inflation at 2.1% in 2025, up from a previous estimate of 2%.
