Comments of ECB Officials Confirm Possibilities Of Rate Hike Next Year
Investors now estimate about 90% of the likelihood that the European Central Bank will raise interest rates in July 2019. This happened after comments of central bank officials, which reinforced the view that the normalization of monetary policy is still in full swing.
Peter Praet (the ECB’s Chief Economist) as well as Jens Weidmann (Bundesbank President), sees signs of a convergence of inflation towards the goal of the central bank. He said that any decision to end or further expand the net purchases will depend on the final decision of the Governing Council of the ECB. Praet noted that low interest rates radically reflect the consequences of unfavorable trends combined with the fall of the global financial crisis and the sovereign debt crisis in the euro area.
Meanwhile, the head of the Bundesbank, Jens Weidmann noted today that inflation in the Eurozone is gradually returning to levels compatible with the target range of the ECB. He also said that now the markets are waiting for the end of the quantitative easing program (QE) by the end of this year and "these expectations are believable." According to the politician, the end of QE will be the first step towards the normalization of monetary policy.