The European Central Bank will seek another huge 75 basis point increase in its deposit and refinancing rates when it meets on October 27 as it tries to contain inflation five times its target, according to German tourist press. As in much of the world, euro zone inflation has soared due to skyrocketing energy prices, and supply chains still recovering from the coronavirus pandemic have taken a fresh hit. the Russian invasion of Ukraine.
The ECB aims for inflation of 2,0%, but last month it was 10,0%. It will average a high of 9,6% this quarter, higher than thought last month, before gradually falling, but will not reach the target until the end of 2024, according to a Reuters poll. Inflation is too high. Rapid rate increases are needed.
Much of the price pressure comes from energy costs. With no end in sight to the Russia-Ukraine conflict, nearly 65% of 34 respondents said the cost of living in the euro zone would get worse or significantly worse. Only 12 said it would improve.
