European Central Bank And Czech National Bank

February 3, 2022

The European Central Bank‘s cluster of interest rates (a -0.50% deposit rate since September 2019 and a zero percent refinancing rate and 0.25% Marginal Lending Facility rate since March 2016) were not changed today. Bond purchases as part of the Pandemic Emergency Program will cease after next month however, and quantitative support through the monthly Asset Purchase Program are being scaled backed. Unlike the Fed and Bank of England and in spite of higher-than-forecast record inflation (5.1% on the CPI and 26.2% on the PPI), officials at the ECB haven’t signaled a likely rate hike in the near-term, but markets are pricing in some increases nonetheless. Today’s statement includes this: “The Governing Council stands ready to adjust all of its instruments, as appropriate, to ensure that inflation stabilizes at its 2% target over the medium term.”

The Czech National Bank‘s two-week repo rate was raised for the sixth time since last June. Today’s hike of 75 basis points to 4.5% followed increases of 100 basis points in December, 125 bps in November, 75 bps in September and 25 bps each in August and June. The rate level will now be its highest in 20 years and up from a pandemic low of 0.25%.

Copyright 2022, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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