ECB Inches Nearer to the Interest-Rate Summit
With the euro-zone economy faltering, policymakers should signal a pause in rate hikes is imminent.
Skipping is becoming fashionable for central bankers.
Photographer: Reg Speller/Fox Photos/Hulton Archive/Getty Images
The European Central Bank will almost certainly implement the eighth successive increase in its official deposit rate on Thursday, this time by 25 basis points to 3.5%. The interesting bit will be whether it signals it might be ready to at least start thinking about thinking about a pause. Given a welcome downturn in inflation recently and signs that the euro-zone economy is flatlining at best, a hint that rate hikes are no longer automatic at every meeting would be prudent.
It should have some help from the Federal Reserve, which is widely expected to pause when it meets Wednesday. All but one of of 66 Bloomberg survey participants expect the Fed to stick at 5.25%. There’s a similar consensus for the ECB decision, with 37 of 38 respondents anticipating a quarter-point increase. The futures market suggests an additional 25 basis points will follow in July — but that might change if ECB President Christine Lagarde is anything other than implacably hawkish this week.