Commentary Directory
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- A Strong March Leads to a Surge in Chinese GDP in Q1 2023
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- Choppy GDP Means UK Should Avoid Q1 Recession
- Japanese Consumer Confidence Jumps to Highest Level in Over a Year
- The End of Summer Sees the End of Disinflation in Europe
- Labor Market Indicators are Starting to Unify on Easing in Hiring
- Inflation and Tight Financial Conditions Weigh on the German Consumer
- Euro Area Money Supply Contracts for the First Time Since 2010
- Dismal Economic Data Out of Germany
- Core Durable Goods New Orders See Gentle Uptrend in July
- More UK Data Pointing to Q3 Decline
- Whispers of a UK Contraction in Q3
- Japan's Core Inflation Resumes Uptrend in July
- Early July Economic Data Leads to a Sharp Increase in Q3 Growth Expectations
- UK CPI: Energy Inflation Crashes but Services Inflation is Still Sticky
- China's Weak Start to Q3 Means More PBoC Easing
- Bank of Japan is Too Optimistic on Inflation
- The Bank of England Pauses in a Near Split Decision
- UK Inflation August Update: A Precursor to the Bank of England's Announcement
- Housing Starts Tumble in August Amid Rising Mortgage Rates
- US Retail Sales Grow at Fastest Monthly Rate Since the Start of the Year
- US Consumer Prices Surge in August Driven by Energy Costs
- August NFIB Survey Showed a Tough Environment for Small Businesses
- All Signs Point to a Weaker Labor Market in August
- Thoughts on GME and This Week in the Stock Market
- Record Home Price Levels Point to Strength in Post-Pandemic Economy
- The Stock Market Looks Overvalued, but It's Probably Not
- China GDP Growth Surpasses Expectations
- President-elect Joe Biden Introduces His "American Rescue Plan"
- Political Polarization Intensifies with Another Impeachment Along Party Lines
- Metal Demand Has a Bright Future in 2021 and Beyond
- What Happened to That US-China Trade Dispute?
- Civil Unrest, A Rising Threat to the 2021 Economy
- What's in the $900 Billion Relief Plan?
ECB Announcement: September 2023
Jacob Hess
September 14, 2023
- EconoBrief
- Euro Area
ECB Announcement
9/14/2023 (September 2023)
4.5% (+25 bps)
Above Expectations
The ECB has increased its key interest rates by 25 bps. The rate on refinancing operations is now 4.5%. Alternatively, the PEPP portfolio will continue to be reinvested until at least the end of 2024. The ECB staff has also revised down the path of core inflation to an average of 5.1% in 2023, 2.9% in 2024, and 2.2% in 2025 while the path of overall inflation was upgraded which reflects the expected rise in energy prices. Additionally, growth estimates for the euro area were also lowered. Now at 0.7% for 2023. The ECB seems to suggest that this will be the last hike, “the Governing Council considers that the key ECB interest rates have reached levels that, maintained for a sufficiently long duration, will make a substantial contribution to the timely return of inflation to the target.”
The ECB opts for the hawkish move of raising rates again despite emerging growth concerns. However, it decided to remain reinvesting the PEPP portfolio through the end of the year in a bit of a give and take move. This is undoubtedly a very hawkish move against inflation. However, there were some dovish details to note. The downgrade to the inflation outlook suggests that the ECB likely expects that it will not have to move much more in its fight against elevated inflation. This is also seen in the following statement that suggests that this rate hike could be the last: “The Governing Council considers that the key ECB interest rates have reached levels that, maintained for a sufficiently long duration, will make a substantial contribution to the timely return of inflation to the target.” In the end, a very hawkish move.
© MTS Insights 2023