The European Central Bank (ECB) will raise interest rates again on Thursday to fight runaway inflation and, with a big move and a record one under consideration, the only question is by how much, according to Reuters.
Concerned that sky-high inflation is getting increasingly entrenched, policymakers are scrambling to keep a lid on the bloc’s most damaging bout of price growth in nearly half a century as it eats up household savings and weighs on business output.
Ultimately, the choice will be between a 50 and a 75 basis point increase in the zero percent deposit rate, with expectations now leaning towards a bigger increase but not with full conviction.
The larger move would be the biggest ever increase of the ECB’s benchmark rate, but regardless of the outcome the bank’s direction of travel will be clear.
More hikes are factored in for coming months as price pressures are consistently exceeding even the most pessimistic forecasts, Reuters reports.
Updates to ECB forecasts are certain to show sharply higher inflation but significantly weaker economic growth.