The European Central Bank announced the latest monetary policy decision today at 1:15 pm GMT. Economists expected a 50 basis point rate hike while money markets were inching closer to a 25 basis point move. Ultimately, it turned out that economists were right with ECB deciding on a 50 basis point rate hike.
New set of economic projections points to a lower inflation. Headline inflation in 2023 is seen at 5.3%, down from 6.3% in previous forecast, while core inflation forecast was boosted from 4.2 to 4.6% for 2023. However, core inflation is seen at 2.5% in 2024, down from previous forecast of 2.8%, while headline inflation next year is seen at 2.9%, down from 3.4% in previous forecast.
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Commenting on current banking sector turmoil, ECB said that it is monitoring market tensions closely and that it is ready to respond to price stability and financial stability. An important takeaway is that mention of further rates moves has been removed from the statement.
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