Central Bank policymakers will discuss whether to increase interest rates by a larger-than-expected amount.
At their meeting on Thursday, European Central Bank policymakers will discuss whether to increase interest rates by a larger-than-expected 50 basis points to control record-high inflation. However, the discussion about increasing rates by 25 or 50 basis points was still wide open.
Other central banks have increased rates in larger increments to limit rising inflation, such as by 75 or even 100 basis points. But as the eurozone entered a possible recession, several governors became more wary of slowing growth.
According to news that a 50 bp increase was being discussed, the euro increased on Tuesday. Government bond yields in the eurozone also rose, with Germany’s benchmark two-year note now yielding 1.329 percent. After its most recent meeting, the ECB announced on June 9 that it would gradually raise interest rates, possibly by 25 basis points in July and by a larger amount in September.
Inflation in the eurozone reached 8.6% last month and is expected to continue increasing until the fall due to rising fuel and food prices.
