Moves and fixations of the ECB

27 October 20222 years ago babelfish

ECB less austere than expected? The comment of Michele Morra, Portfolio Manager of Moneyfarm

WHAT THE ECB HAS DECIDED

The ECB meeting was characterized by a lower than expected level of austerity. If on the one hand we see a second “jumbo rate hike” of 75 basis points and the recalibration of TLTRO 's plans, on the other hand a more accommodating rhetoric and the flexibility on APP and PEPP reinvestments represented an expansive surprise.

THE PRIORITIES OF THE ECB

Although much of the inflation is attributable to the increase in energy prices, with this choice the ECB continues to favor the prevention of the inflationary spiral to the detriment of economic growth, but leaves a certain degree of flexibility to contain the risk of fragmentation.

FORECASTS

In this sense, the latest ECB Bank Lending Survey already shows signs of transmission of the restrictive cycle to the real economy, with a significant decline in the risk appetite of credit institutions. Considering also the geopolitical factors and the costs for businesses, the real growth of the Eurozone's GDP has been revised sharply downwards by the International Monetary Fund, with Italy and Germany in recession as early as 2023.

THE SENTIMENT OF THE MARKETS

Despite these signs, markets are now expecting a steady rise in interest rates throughout 2023, but the recent collapse in gas prices and the deleterious effects on the economy could curb the restrictive cycle, positively surprising government bonds. but further sinking the single currency.

Michele Morra , Portfolio Manager of Moneyfarm

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Moneyfarm

Founded in 2011 by Paolo Galvani and Giovanni Daprà, Moneyfarm is an independent financial consultancy company with a digital approach, specializing in medium-long term investments. With a team of 200 professionals, Moneyfarm manages the assets of over 90,000 savers (based on over 530,000 active users) at a rate of growth that has always been double-digit year over year.

This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/mosse-e-fissazioni-della-bce/ on Thu, 27 Oct 2022 13:11:54 +0000.