6 December 2022 | Other

ECB needs more rate hikes but inflation close to peak, chief economist says

ECB chief economist Philip Lane said in an interview with Milano Finanza interest rates need to be increased several more times in order to reduce price pressures. Such measures are necessary even if overall inflation is close to zero. 

According to Lane, the peak of inflation is already close. Previously, the bank raised rates by a total of 200 basis points to slow record high inflation. Now, after a hike of 75 bps. The ECB has reported a reduced pace of monetary policy tightening for December.

This signals a 50 bps increase in the ECB deposit rate after the upcoming meeting. In 2023, the deposit rate could be as high as about 3%.

Lane clearly did not approve of an increase by that level, but still voiced his argument for a slowdown. 

Inflation at 10.0% may have already peaked, but its decline will be slow in the coming months. Growth will still be possible in early 2023.

Company MarketCheese
Period: 01.05.2025 Expectation: 1000 pips
GBPUSD to test level of 1.34 again
25 April 2025 52
Brent sell
Period: 01.05.2025 Expectation: 660 pips
Trade uncertainty and excess OPEC+ supply are dragging down Brent
25 April 2025 39
Period: 29.04.2025 Expectation: 600 pips
USDCAD to head towards 1.39400 after rebounding from 1.38200
25 April 2025 32
Period: 02.05.2025 Expectation: 1669 pips
AUDCAD gains on potential easing of trade tensions between US and China
25 April 2025 35
Period: 30.04.2025 Expectation: 12000 pips
ETHUSD set to test upper boundary of downtrend channel
24 April 2025 83
Period: 25.04.2025 Expectation: 500 pips
AUDUSD to fall to 0.63000
24 April 2025 43
Go to forecasts