ECB's Last Hike: Lagarde Runs Out of Road
The European Central Bank is expected to raise its deposit rate by 25 basis points at its meeting next week — and then stop, according to a Bloomberg survey of economists published on Friday that shows a clear majority believe this will be the final increase in the current tightening cycle.
The European Central Bank is expected to raise its deposit rate by 25 basis points at its meeting next week — and then stop, according to a Bloomberg survey of economists published on Friday that shows a clear majority believe this will be the final increase in the current tightening cycle.
If the consensus holds, the ECB will have raised rates ten times since July 2022, bringing the deposit facility rate to a level not seen since the euro was new and the continent was still congratulating itself on its own ambition. The question now is not whether Christine Lagarde will move next week — she almost certainly will — but what comes after, and how long the ECB holds before the political pressure to cut begins to compound.
For Malta, the timing matters. Variable-rate mortgage holders who have absorbed two years of consecutive increases will be watching Frankfurt as closely as any trader in London. The cost of living guide tells part of that story — household finances on the island are already stretched in ways the ECB's models only partially capture.
Eurozone inflation remains above target. Growth is stalling. The bank is threading a needle with one eye closed, per Bloomberg, and the room for error is narrowing with every quarter-point move.
One hike left. Then the hard part begins.
