European Central Bank (ECB) increased its rate by half a percentage point last month and is expected to double down on the strategy during its upcoming meeting in early May. However, the hike might not be as significant as some experts predict.
Yannis Stournaras, who is a member of ECB’s Governing Council, said in a recent interview that the bank’s interest rate “reached close to the ceiling, close to the maximum increase.” He called for a cautious approach that would take economic data in consideration before making a decision.
“Close — I didn’t say we have reached it yet, but we are converging toward it,” Stournaras, who also serves as Governor of the Bank of Greece, added via Bloomberg.
Analysts predict that ECB’s rates will reach their peak in the summer before the European Union’s central bank reverses its course and starts bringing them down.
Inflation in Eurozone reached 10% in late 2022 before starting a steady decrease. It was 8.5% in February before coming down to 6.9 % in March 2023. There is an expectation that the mark will drop to 3% by the end of the year and continue to be on a downward trajectory in 2024.