Berlin, Jun 15 (EFE).- The European Central Bank (ECB) will foreseeably raise interest rates this Thursday by a quarter of a percentage point, up to 4%, thus continuing with the progressive slowdown in its adjustments derived from the relative containment of inflation.
The meeting of the European issuer takes place one day after its counterpart in the United States, the Federal Reserve (Fed), decided after ten consecutive increases, a pause in the rise, although it considers additional increases likely this year, as explained yesterday by its president , Jerome Powell.
The Federal Reserve takes a break
The key lies in the evolution of inflation on both sides of the Atlantic, which is being contained although it is still at levels above the references used by central banks, around 2%.
In the United States, prices fell by nine tenths in May, the second largest decrease since the indicator began to decrease in July 2022, which allowed the year-on-year rate to be placed at 4%.
Inflation also declined in the euro area, with a drop of another nine tenths in May, although it remains at high levels, at 6.1% year-on-year, and the underlying rate -which excludes the effect of energy, fresh food, alcohol and tobacco – fell by three tenths, to 5.3%.
However, the president of the ECB, Christine Lagarde, already advanced on June 5 that “there is no clear evidence that underlying inflation has reached a ceiling”, and reiterated the objective of bringing interest rates to “sufficiently restrictive levels” to get prices down to the 2% mark.
It would be the eighth consecutive adjustment
This Thursday’s adjustment would be the eighth consecutive one agreed by the ECB, with which interest in the Eurozone will reach its record since the introduction of the community currency twenty years ago, standing at 4% for the official rate (the one charged at banks for a period of one week) and 3.50% for the deposit facility (the amount received by entities for their overnight deposits).
In the event that this increase occurs, an increase in the Euribor above 4% is foreseeable, a level not reached since 2008, with which it is to be expected that banks will continue to tighten risk criteria for granting mortgages and, in general, closing the faucet to credit.
PIMCO portfolio manager Konstantin Veit expects the ECB to raise 25 basis points as price pressure remains “tough” and the Eurozone economy remains “resilient”.
The economist for Europe of the DWS manager, Ulrike Kastens, agrees in betting on a rise of 25 basis points and predicts that other increases will follow, since “it is too early to declare victory over inflation.”
“My expectation is that the ECB will stick to its message: it will closely monitor available economic data and hint that further rate hike steps may follow,” Kastens said.
According to the chief economist of insurance group Standard Life, Paul Diggle, it is clear that the ECB “is not going to introduce a pause” this Thursday.
He believes that there will be another increase in July, but it will be “probably the last increase of this cycle” in view of the gradual reduction in inflation and the negative effects of the adjustments on credit and investment.
Deutsche Bank analysts also expect a rise of a quarter of a point, from which, in the short term, the shares of banking entities will benefit, as well as the euro, although for the most part this expectation has already been “discounted” in the quotes.