Charting course out of stimulus, ECB to set stage for rate hikes

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FRANKFURT :The European Central Bank will pull the plug on years of stimulus on Thursday and signal a string of rate hikes to fight surging inflation, leaving markets only to guess the size and speed of policy tightening.With inflation at a record-high 8.1 per cent and broadening quickly, the ECB has already

FRANKFURT :The European Central Bank will pull the plug on years of stimulus on Thursday and signal a string of rate hikes to fight surging inflation, leaving markets only to guess the size and speed of policy tightening.

Everything else, including the size of the initial rate increase from minus 0.5 per cent, is likely to be left open, with ECB chief Christine Lagarde emphasizing flexibility and optionality. "The likelihood of a 50-basis-point hike is rising by the day," Moody's Analytics senior economist Kamil Kovar said.

The ECB's first rate hike in over a decade would still leave it trailing most of its global peers, including the U.S. Federal Reserve and the Bank of England, which have been raising aggressively and promising even more action.

 

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