News: EUR 2022-11-21 14:41

ECB's Lane makes case for smaller rate hikes ahead - MNI

The European Central Bank will raise interest rates again in December and next year to fight inflation but those increases may well be smaller than the most recent ones, the bank's chief economist Philip Lane said in an interview published on Monday.

With the inflation rate in double digits, the ECB has raised interest rates by 200 basis points in just three months from record low levels, and is set to mop up some of the trillion euros pumped into the financial system in recent years.

Lane suggested the next rate hike would be smaller than the record 75 basis-point-increases decided at the last two ECB meetings, but won't be the last.

"One platform for considering a very large hike, such as 75 basis points, is no longer there," MNI quoted Lane as saying. "The more you've already done on a cumulative basis, that changes the pros and cons of any given increment."

He said the ECB was not about the pause its hiking cycle but "to move at the appropriate time to smaller increments" and reduce its bond holdings, the key part of its stimulus policy of the past decade, in a "more mechanical" fashion.

"I don't think we're going to be on a meeting-by-meeting basis interconnecting the interest rate decision with the pace (of bond reinvestments) for the next month or two," Lane said. "It should be probably more mechanical than that."

He hinted at higher inflation next year than the ECB was expecting in September, in light of more elevated energy prices and government deficits, while he said the outlook for 2024-25 was more mixed.

"For those years the forecast will have to balance the fact that inflation has a knock-on effect, for example, on the wage mechanism," Lane said. "But on the other hand, we do have the fact that the financial conditions are far different than what we had going into the September forecast."
Recent events
2022-12-01 02:50
News 93
India: GDP growth stays strong in 3Q22

3Q22 GDP rose at a 6.3%YoY pace, slightly exceeding market expectations and keeping growth for the full year on track to...

2022-11-30 14:00
News 342
Australia sees unexpected drop in October inflation

Monthly inflation data not only provides a more timely look at Australia's inflation than the old quarterly series, it h...

2022-11-30 13:58
News 284
Eurozone inflation comes down in November, paving way for 50bp ECB hike

Inflation dropped more than expected from 10.6 to 10% in November, mainly on energy price developments. Core inflation r...

2022-11-30 13:49
News 344
Inflation reality check

USD: Holding pattern
Despite geopolitical challenges to the East, it has been a quiet start to the week for FX ma...

2022-11-29 21:02
News 240
Some relief in German inflation

German inflation came down somewhat in November, on the back of energy base effects. However, the ongoing pass-through o...

2022-11-29 21:00
News 311
Inflation and energy prices force six in ten Belgians to cut daily expenses

High inflation prompts six in ten Belgians to save on daily expenses
Belgians are looking for savings to cope wit...

2022-11-29 20:58
News 170
Japan: labour market remains tight while consumption begins to slow

Labour market conditions tightened further last month, but we don't see any signs of wage growth yet. Meanwhile, goods c...

2022-11-29 01:16
News 182
U.S. net short dollar positioning hits largest level since July 2021 -CFTC, Reuters data

Speculators raised net short U.S. dollar positioning in the latest week to its largest level since July 2021, according ...

2022-11-29 01:14
News 207
U.S. Treasury net shorts decrease in latest week - CFTC

NEW YORK, Nov 28 (Reuters) - Speculators' net bearish bets on U.S. Treasury note futures decreased in the latest week, a...

2022-11-29 01:11
News 269
Dollar rebounds on Fed expectations, Aussie drops

NEW YORK, Nov 28 (Reuters) - The dollar clawed back earlier losses on Monday as a hawkish Federal Reserve official laid ...

2022-11-25 15:20
News 184
China’s central bank cuts RRR to support economy

The People's Bank of China cut the required reserve ratio by 0.25 percentage points to support economic growth, as the e...

2022-11-25 04:15
News 228
Australia shares likely to rise; NZ falls

Australian shares are likely to rise for the fourth straight day on Friday, as investors remain upbeat on the U.S. Feder...

2022-11-25 03:57
News 181
New Zealand consumer confidence slips in November - ANZ-Roy Morgan

Consumer confidence in New Zealand fell in November compared with the prior month amid soaring inflation, rising rates a...