net_left adver left

ECB signals rates lift-off, eyes bigger move in September

Friday, June 10, 2022

By Balazs Koranyi and Bart H. Meijer

FRANKFURT/AMSTERDAM (Reuters) - The European Central Bank ended a long-running stimulus scheme on Thursday and said it would deliver next month its first interest rate hike since 2011, followed by a potentially larger move in September.

With inflation at a record-high 8.1% and still rising, the ECB now fears that price growth is broadening out and could morph into a hard-to-break wage-price spiral, heralding a new era of stubbornly higher prices.

The central bank for the 19 countries that use the euro said it would end quantitative easing on July 1, then raise interest rates by 25 basis points on July 21. It will then hike again on Sept. 8 and go for a bigger move, unless the inflation outlook improves in the meantime.

"We will make sure that inflation returns to our 2% target over the medium term," ECB President Christine Lagarde said during a news conference. "It is not just a step, it is a journey," she said of the moves signalled on Thursday.

The rapid rise in price was driven initially by energy and food prices as economies emerged from COVID-19 lockdowns but Russia's invasion of Ukraine has accelerated those trends and price growth is so widespread that even underlying inflation is running at twice the rate of the ECB's target.

The size of rate hikes to curb price growth has been intensely debated by ECB policymakers, with Chief Economist Philip Lane preferring 25-basis-point moves in July and September but others arguing for 50 bps to be considered.

Supporting their case, the ECB raised its inflation projections once again, now expecting inflation at 6.8% this year versus a previous forecast for 5.1%. In 2023, it sees inflation at 3.5% and in 2024 at 2.1%, indicating four straight years of inflation overshoots.

This is too high, Lagarde argued and said that a repeat of these projections three months from now would require quicker rate hikes.

"If you are at 2.1% in 2024 or beyond, then the increment of the adjustment will be higher? The answer is yes," Lagarde said.

A 50 basis point hike, the logical next increment, would be the ECB's largest one-off rate increase since June 2000. At minus 0.5%, the ECB's deposit rate has been in negative territory since 2014.

BEHIND THE CURVE?

"Given the ECB’s hawkish signals, we now expect the central bank to follow the 25 basis point July rate hike with 50 basis point moves in both September and October," Nordea said in a note to clients.

"After that, the central bank is likely to slow down, hiking by 25 basis points in December."

Markets moved to price in 144 basis points of rate hikes by the end of this year following the statement, up from 138 bp earlier, or an increase at every meeting from July, with several of those moves in excess of 25 basis points.

They are also anticipating a combined 240 basis points of moves in the deposit rate by the end of 2023, putting the interest rate peak close to 2%.

GRAPHIC: Markets bet ECB will hike interest rates fast (https://graphics.reuters.com/EUROZONE-MARKETS/zdpxowdowvx/chart.png)

"I think in times of great uncertainty, gradualism is probably appropriate, more so than if the path is clear, well-identified and we all understand where we are heading,” said Lagarde, who just months ago said that a rate hike this year was highly unlikely.

Some economists argued that the ECB was already too late in tacking inflation so raising rates to the neutral level, where it is neither stimulating nor holding back the economy, will not be enough.

"The ECB remains behind the curve," Commerzbank (ETR:CBKG) chief economist Jörg Krämer said.

"It is not enough to just take its foot off the gas, it must also step on the brakes," Krämer said. "But that is precisely what it is not prepared to do, which is why we expect inflation to average well above 2% in the coming years."

The ECB's first rate hike in over a decade will still leave it trailing most of its global peers, including the U.S. Federal Reserve and the Bank of England, which have been raising aggressively and promising even more action.

Unlike the Fed, the ECB also has no plans to reduce its balance sheet with policymakers reaffirming their commitment to keep reinvesting cash maturing from the 5 trillion euros worth of public and private debt the ECB holds.

Even as she promised rate hikes, Lagarde vowed not to allow the borrowing costs of former euro zone debt crisis countries to be pushed wildly higher by financial markets again. "We are committed, committed!" Lagarde said.

GRAPHIC: ECB interest rates and balance sheet (https://fingfx.thomsonreuters.com/gfx/mkt/egvbkwrngpq/Pasted%20image%201654781200997.png)

While the start of policy tightening is now set, the end point remains uncertain.

Lagarde has said that rates should move towards the neutral point at which the ECB is neither simulating nor holding back growth. But this level is undefined and unobservable, leaving investors guessing just how far the ECB wants to go.

Leave your comment
HOT AUTO TRADE BOT SOFTWARE adver right
APPROVED BROKERS
net_home_top HOT AUTO TRADE BOT SOFTWARE
30-06-2022 04:59:32 (UTC+7)

EUR/USD

1.0442

+0.0003 (+0.03%)

Summary

↑ Sell

Moving Avg:

Buy (2)

Sell (10)

Indicators:

Buy (2)

Sell (3)

EUR/USD

1.0442

+0.0003 (+0.03%)

Summary

↑ Sell

Moving Avg:

Buy (2)

Sell (10)

Indicators:

Buy (2)

Sell (3)

GBP/USD

1.2122

-0.0003 (-0.02%)

Summary

Buy

Moving Avg:

Buy (10)

Sell (2)

Indicators:

Buy (1)

Sell (2)

USD/JPY

136.55

-0.03 (-0.02%)

Summary

↑ Sell

Moving Avg:

Buy (0)

Sell (12)

Indicators:

Buy (0)

Sell (10)

AUD/USD

0.6878

-0.0003 (-0.04%)

Summary

Sell

Moving Avg:

Buy (6)

Sell (6)

Indicators:

Buy (1)

Sell (6)

USD/CAD

1.2895

+0.0003 (+0.03%)

Summary

↑ Buy

Moving Avg:

Buy (12)

Sell (0)

Indicators:

Buy (6)

Sell (2)

EUR/JPY

142.59

+0.01 (+0.01%)

Summary

Sell

Moving Avg:

Buy (4)

Sell (8)

Indicators:

Buy (3)

Sell (4)

EUR/CHF

0.9970

-0.0001 (-0.01%)

Summary

Neutral

Moving Avg:

Buy (3)

Sell (9)

Indicators:

Buy (6)

Sell (1)

Gold Futures

1,819.20

-2.00 (-0.11%)

Summary

↑ Sell

Moving Avg:

Buy (2)

Sell (10)

Indicators:

Buy (0)

Sell (5)

Silver Futures

20.733

-0.139 (-0.67%)

Summary

↑ Sell

Moving Avg:

Buy (0)

Sell (12)

Indicators:

Buy (1)

Sell (7)

Copper Futures

3.7717

-0.0083 (-0.22%)

Summary

↑ Buy

Moving Avg:

Buy (10)

Sell (2)

Indicators:

Buy (6)

Sell (1)

Crude Oil WTI Futures

109.63

-2.13 (-1.91%)

Summary

↑ Buy

Moving Avg:

Buy (9)

Sell (3)

Indicators:

Buy (8)

Sell (0)

Brent Oil Futures

112.30

-1.50 (-1.32%)

Summary

↑ Buy

Moving Avg:

Buy (10)

Sell (2)

Indicators:

Buy (8)

Sell (0)

Natural Gas Futures

6.416

-0.154 (-2.34%)

Summary

Neutral

Moving Avg:

Buy (5)

Sell (7)

Indicators:

Buy (7)

Sell (1)

US Coffee C Futures

228.05

+10.30 (+4.73%)

Summary

↑ Sell

Moving Avg:

Buy (3)

Sell (9)

Indicators:

Buy (0)

Sell (7)

Euro Stoxx 50

3,514.32

-34.97 (-0.99%)

Summary

Neutral

Moving Avg:

Buy (6)

Sell (6)

Indicators:

Buy (4)

Sell (4)

S&P 500

3,818.83

-2.72 (-0.07%)

Summary

↑ Buy

Moving Avg:

Buy (11)

Sell (1)

Indicators:

Buy (10)

Sell (0)

DAX

13,003.35

-228.47 (-1.73%)

Summary

↑ Sell

Moving Avg:

Buy (0)

Sell (12)

Indicators:

Buy (1)

Sell (7)

FTSE 100

7,312.32

-11.09 (-0.15%)

Summary

Sell

Moving Avg:

Buy (1)

Sell (11)

Indicators:

Buy (0)

Sell (4)

Hang Seng

21,996.89

-422.08 (-1.88%)

Summary

Neutral

Moving Avg:

Buy (10)

Sell (2)

Indicators:

Buy (2)

Sell (4)

US Small Cap 2000

1,713.32

-25.52 (-1.47%)

Summary

Neutral

Moving Avg:

Buy (3)

Sell (9)

Indicators:

Buy (4)

Sell (4)

IBEX 35

8,188.00

-129.50 (-1.56%)

Summary

↑ Buy

Moving Avg:

Buy (8)

Sell (4)

Indicators:

Buy (6)

Sell (2)

BASF SE NA O.N.

41.580

-1.445 (-3.36%)

Summary

↑ Sell

Moving Avg:

Buy (4)

Sell (8)

Indicators:

Buy (0)

Sell (8)

Bayer AG NA

57.62

-2.61 (-4.33%)

Summary

Neutral

Moving Avg:

Buy (5)

Sell (7)

Indicators:

Buy (8)

Sell (1)

Allianz SE VNA O.N.

183.72

+0.62 (+0.34%)

Summary

Buy

Moving Avg:

Buy (10)

Sell (2)

Indicators:

Buy (4)

Sell (4)

Adidas AG

170.02

-0.30 (-0.18%)

Summary

↑ Sell

Moving Avg:

Buy (2)

Sell (10)

Indicators:

Buy (1)

Sell (9)

Deutsche Lufthansa AG

5.813

-0.222 (-3.68%)

Summary

↑ Buy

Moving Avg:

Buy (12)

Sell (0)

Indicators:

Buy (7)

Sell (0)

Siemens AG Class N

101.40

-2.74 (-2.63%)

Summary

↑ Sell

Moving Avg:

Buy (0)

Sell (12)

Indicators:

Buy (0)

Sell (7)

Deutsche Bank AG

8.571

-0.292 (-3.29%)

Summary

Neutral

Moving Avg:

Buy (0)

Sell (12)

Indicators:

Buy (5)

Sell (3)

 EUR/USD1.0442↑ Sell
 GBP/USD1.2122Buy
 USD/JPY136.55↑ Sell
 AUD/USD0.6878Sell
 USD/CAD1.2895↑ Buy
 EUR/JPY142.59Sell
 EUR/CHF0.9970Neutral
 Gold1,819.20↑ Sell
 Silver20.733↑ Sell
 Copper3.7717↑ Buy
 Crude Oil WTI109.63↑ Buy
 Brent Oil112.30↑ Buy
 Natural Gas6.416Neutral
 US Coffee C228.05↑ Sell
 Euro Stoxx 503,514.32Neutral
 S&P 5003,818.83↑ Buy
 DAX13,003.35↑ Sell
 FTSE 1007,312.32Sell
 Hang Seng21,996.89Neutral
 Small Cap 20001,713.32Neutral
 IBEX 358,188.00↑ Buy
 BASF41.580↑ Sell
 Bayer57.62Neutral
 Allianz183.72Buy
 Adidas170.02↑ Sell
 Lufthansa5.813↑ Buy
 Siemens AG101.40↑ Sell
 Deutsche Bank AG8.571Neutral
Mua/Bán 1 chỉ SJC
# So hôm qua # Chênh TG
SJC Eximbank6,805/ 6,865
(0/ 0) # 1,727
SJC HCM6,820/ 6,890
(0/ 0) # 1,751
SJC Hanoi6,820/ 6,892
(0/ 0) # 1,753
SJC Danang6,820/ 6,892
(0/ 0) # 1,753
SJC Nhatrang6,820/ 6,892
(0/ 0) # 1,753
SJC Cantho6,820/ 6,892
(0/ 0) # 1,753
Cập nhật 30-06-2022 04:59:34
Xem lịch sử giá vàng SJC: nhấn đây!
ↀ Giá vàng thế giới
$1,818.00-0.5-0.03%
Live 24 hour Gold Chart
ʘ Giá bán lẻ xăng dầu
Sản phẩmVùng 1Vùng 2
RON 95-V33.47034.130
RON 95-III32.87033.520
E5 RON 92-II31.30031.920
DO 0.05S30.01030.610
DO 0,001S-V30.81031.420
Dầu hỏa 2-K28.78029.350
ↂ Giá dầu thô thế giới
WTI$108.29+2.272.05%
Brent$111.91+1.731.52%
$ Tỷ giá Vietcombank
Ngoại tệMua vàoBán ra
USD23.070,0023.380,00
EUR23.788,7225.121,19
GBP27.597,2728.774,53
JPY166,01175,75
KRW15,4718,85
Cập nhật lúc 18:53:49 29/06/2022
Xem bảng tỷ giá hối đoái
adver main right