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Interest Rates at the ECB – A Hawkish Pause?

Interest Rates at the ECB – A Hawkish Pause?

The eurozone has not been immune to the problem of rising rates and inflation. The European Central Bank’s (ECB) interest rate decision due tomorrow overshadows most financial data releases for the rest of the week.

Some economists say that Christine Lagarde and her fellow policymakers are ready to adopt a “hawkish pause” approach as previous rate hikes seem to have an effect on the euro bloc’s economy.

In the UK, GDP data published by the ONS disappointed as the UK’s economy shrank more than expected (-0.5%) in July. In response, the British Pound lost 0.3% against the US Dollar as well as 0.2% against euro immediately following the publication of the report. Commenting on the UK GDP report, JPMorgan economists noted that “we have been arguing against the idea that the UK is entering into a proper recession dynamic on the grounds that household real incomes look set for a strong gain in 2H23, while business confidence is generally running above average. That remains the case, but the near term path for growth looks worse and we have revised down our third-quarter GDP forecast from 0.3%q/q to 0.0%.”

Interest Rates Decision of the ECB

The ECB’s governing board will convene on Thursday to decide…

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