Unexpected inflation jump adds to ECB headache | – #Unexpected #inflation #jump #adds #ECB #headache
PARIS/MADRID, Feb 28 (Reuters) – In two of the euro zone’s biggest economies inflation unexpectedly increased this month, data released on Tuesday Europe The Central Bank raised interest rate hike expectations and challenged the narrative that a rapid decline in inflation is now in place. Continue.
The ECB plans to raise its key interest rate by 50 basis points to 3% in March, but some policymakers have called for more cautious steps after that, as past rate hikes now continue and the economy begins to respond.
in France inflation It rose from 7.0% to 7.2%, beating forecasts of 7.0%, while in Spain it rose to 6.1% from 5.9%, ahead of the 5.5% seen in a Reuters poll.
The figures also cast doubt on whether the euro zone’s combined figure due on Thursday will fall to 8.2% from 8.6%, but economists say Wednesday’s German number will be more important than Tuesday’s release.
Markets have fully priced in another 150 basis point rate hike by the end of the year, bringing the ECB’s deposit rate to a peak of 4%, reflecting the view that it will take longer for the ECB to return rate hikes to 2. % target.
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Germany, which is the benchmark for the euro zone 10 annual bond yields rose to their highest level since 2011 at 2.66%, boosting traders’ bets that ECB interest rates will peak around 4% later in the year.
Fears that inflation will be more persistent than expected, especially for key commodities that exclude volatile fuel and food prices, have pushed expectations for a peak in ECB rates by more than 40 basis points this month.
Some investors even think there is a risk that the ECB will raise rates by more than 50 basis points in March, despite the ECB’s clear indication of action.
JPMorgan economist Greg Fuzesi said, “Both report was firmer than we expected, indicating that inflation is more sustainable … so we note some upside risks for Thursday (eurozone release),” he said.
in France during the last year of inflation 20 inflation still has some way to go after being among the lowest in the euro zone that encompasses the country.
ING economist Charlotte de Montpellier said, “February data shows that in France inflation has not yet reached its peak.” “Given how core global inflation will continue to rise in the coming months, this Europe It will give the Central Bank additional arguments to continue raising rates after the first quarter.”
Core inflation also accelerated in Spain, adding to the ECB’s concerns about the persistence of price increases.
Reporting by Sudip Kar-Gupta, Joao Manuel Mauricio, Belén Carreño and Stefano Rebaudo; Written by Balazs Koranyi; Edited by Christina Fincher
Our standards: Thomson Reuters Trust Principles.
2023-02-28 23:58:14
Source – reuters
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