Statement on today’s interest rate decision by the European Central Bank
Postponed is not canceled! As expected, the ECB refrains from raising key interest rates at its meeting today. The situation in the Middle East remains complex and thus it remains unclear how long the Strait of Hormuz will be blocked for international trade and of what extent and duration the impact on the global economy and price developments will be.
The increases in inflation rates since the military escalation in the Middle East have so far been due to the direct increase in energy and commodity prices. The core inflation rate does not yet reflect the price increases. However, consumers’ inflation expectations have already risen. The ECB will continue to keep a close eye on these indicators and continue its strategy of data-based action.
Especially in the event of a prolonged blockade of the Strait of Hormuz, the ECB is likely to raise key interest rates later this year, as the risks of second-round effects will then also increase. In contrast to the situation in 2022, however, the price-driving effects from the demand side are likely to be smaller due to the overall economic situation and the situation on the labour market.
Interest rates have already risen on the capital markets in recent weeks and key interest rate hikes have been priced in, so that the expected key interest rate hikes should not have any additional effects on long-term real estate financing.
