The ECB’s bitter potion for the economy
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Another strong rate hike is expected on Thursday to try to curb inflation, even if it means increasing the risk of recession.
How far is the European Central Bank (ECB) prepared to go to curb inflation and, with it, growth? The big moneymakers of the euro zone have made a radical change of course in a few months. The caution invoked in the face of the economic risks generated by the war in Ukraine was followed by an unfailing determination to raise rates at all costs to curb an uncontrolled inflationary surge. After 9.1% in August, price increases should exceed 10% in the fall. The ECB has been criticized enough for taking too long to become aware of the problem. No more procrastinating.
After a first surprise increase of 0.50 point in July – against 0.25 expected – the board of governors of the central bank should decide on Thursday a new muscular increase in its key rates. The trial balloon launched at the end of August by a few hawks, such as the Dutch and Austrian governors, on an increase of 0.75 points has become the consensus…
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