The European Central Bank has announced a base rate hike of 75 basis points. The move was widely expected by analysts and had already been acquired by the markets in recent weeks.
The ECB also expects further hikes as inflation remains too high but at the same time highlighted that upcoming decisions will be data-driven. The aggressive squeeze indicates a prevalence of the hawk line over doves asking to proceed with caution, with constant rises as the chief economist Philip Lane indicated.
Already in July, the ECB had raised the cost of money, with a 50 basis point increase in the rate. The move had interrupted the long period of near-zero interest rates that had lasted over ten years.
Today’s appointment was highly anticipated by the markets. After the announcement, the Milan Stock Exchange, already volatile throughout the morning, continued in the red. Shortly after 2.30pm, the main FtseMib index fell 0.22%. The BTP / Bund spread is slightly down to 224 basis points.