The European Central Bank Kicks Monetary Tightening into High Gear

After raising rates by 50 basis points in July, the European Central Bank (ECB) has kicked its monetary tightening into high gear. Today’s decision comes because inflation is far too high and could become entrenched. The ECB’s press release clearly indicates that it expects to raise interest rates further in the coming months. However, it remains uncertain how quickly it will act given the economic challenges ahead. We still expect a minimum of two more increases of 50 basis points by the end of the year.