In spite of inflation in the eurozone, the European Central Bank (ECB) is expected to maintain its key interest rate.
As of the 25th (local time), the Financial Times (FT) reported that ECB President Christine Lagarde is expected to discuss the eurozone’s inflation outlook and the timing of an interest rate hike during her monetary policy meeting on the 28th. .
Last month, Christine Lagarde said that the European Central Bank has a long way to go before raising interest rates.
ECB officials expect inflation to fall next year as she warns that the central bank is closely monitoring prices.
In the Eurozone, inflation was 3.4% in September. Experts are expecting it to rise 3.7% this month, the highest rate in 13 years.
Despite exceeding its 2% target, the ECB is remaining patient, in contrast with the U.K. or the U.S. Federal Reserve (Fed), which are suggesting scaling back their stimulus measures.
In the second half of next year, investors anticipate the ECB will raise deposit rates.
ECB stated in July that it was necessary to raise interest rates. It was based on the assumption that the inflation rate will reach 2% in 18 months and remain at that level for 18 months.
Additionally, excluding volatile food and energy prices, the inflation rate should be “stable” at around 2% over the next few months.
Frederic Ducroze, Picte Asset Management’s Swiss strategist, said the ECB would not raise interest rates until 2024.
Nevertheless, he added, “At the moment, the market accepts the fact that they are not in agreement about the price forecasts,”. “They think the conditions are right for the ECB to raise rates by the end of next year.”
FT reported that most economists believe ECB rate hikes are unlikely because eurozone prices will fall below 2% next year.