Successive increases over past 10 meetings seen as finally starting to have an impact on inflation
The governing council of the European Central Bank, meeting in Athens, is expected to hold interest rates steady. Photograph: Kirill Kudryavtsev / AFP via Getty ImagesThe European Central Bank will keep interest rates unchanged at a record high on Thursday, snapping a 15-month streak of hikes, according to analysts, but may discuss a quicker reduction of its oversized portfolio of government debt as it battles excessive inflation.
This is set to shift the debate to just how long rates need to stay at record highs, a tricky exercise as markets are already betting on the next move to be a cut, possibly in the second quarter of next year, a timeline some policymakers consider unrealistic.Productivity ‘gains’ of working from home come under the microscope
“We are increasingly of the view that fourth quarter could also be a quarter of receding output, so in the end the euro zone has a certain probability of entering a recession and this will also leave its mark on monetary policy in the end,” Mr Wolburg added. An even tougher discussion will be whether to opt for an early reduction of bond holdings in the bank’s €1.7 trillion Pandemic Emergency Purchase Programme , as advocated by several policymakers.
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