InvestorQ : What do we infer from the ECB rate hike decision?
Rutuja Nigam made post

What do we infer from the ECB rate hike decision?

3 weeks ago

The European Central Bank or the ECB raised interest rates by 50 bps. This is the first time that the ECB has hiked rates and this is likey to bring them under the ambit of hawkish central bakn aconomies. The ECB had originally guided for a 25 bps rate hike but looking at the rampant growth in inflation, the RBI is more likely to stick the 5% mark. Incidentally, the Euro Zone has been reeling under high inflation due to Russian war and supply chain issues.

ECB has confirmedtha the July rate hike wil not see the aplesf It also hinted at another rate hike when it meets on 08th September. Contrary to the ECB target of 2% inflation, the actual consumer inflation is inching closer to double-digits and that remains the elevated worry for the ECB. This move to hike rates aggressively should help the Euro recovery. During the week, the EUrop fell to 1:1 to the dollar, a parity level that was last seen ahead of the technology bust in the late 1990s.