Hopes that the euro zone can stave off a recession got a boost as Germany defied expectations by reporting another quarter of economic growth, though momentum slowed dramatically in France and Spain, according to Bloomberg.
Surging energy prices, record inflation and rising interest rates are weighing on output across the continent in the third quarter as a post-lockdown splurge on leisure and tourism fades.
But data Friday showed Germany managed to grow by 0.3% between July and September. Consumer-price growth from the region was mixed – hitting the fastest pace since the data series began a quarter-century ago in France, while coming in well below estimates in Spain.
The European Central Bank is racing to wrest inflation back under control but may soon add to the pain as it raises rates beyond levels that support economic growth. It hiked borrowing costs by 75 basis points for a second straight meeting on Thursday.
Several members of the ECB’s Governing Council weighed in on inflation on Friday. Lithuania’s Gediminas Simkus called euro-zone price growth “simply too high,” urging another “substantial” interest-rate increase at the next policy meeting in December.
There’ll be more ECB hikes, according to Slovenia’s Bostjan Vasle, who said “we will judge their size at each session separately, depending on the inflationary and economic outlook.”
The ECB is under no obligation to repeat the 75 basis-point rate moves enacted at the last two meetings, France’s Francois Villeroy de Galhau said.
“Nothing is to be taken for granted,” he said. “We’ve said clearly that we’ll make decisions meeting by meeting in response to the economic data.”