Central Banks
ECB Window for Big Rate Hikes Narrows With Recession Nearing
- Markets expect a repeat of September’s 75 bps move this month
- But a downturn may put the brakes on monetary tightening
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The European Central Bank’s window for outsized interest-rate increases is closing as a recession looms and borrowing costs approach levels that no longer offer support.
Record inflation and the danger of winter energy shortages are sinking confidence in the euro-zone economy. As the hard data gradually worsen, the hawks who currently steer ECB policy have only a limited opportunity to deliver more big hikes.