With less than a week left before the next meeting of the European Central Bank (ECB), different opinions are emerging about what decision officials will take. Andreas Jobst, chief economist at Germany’s Allianz, is already thinking ahead and believes the central bank will have to return to interest rate cuts in early 2023.
“We see a recession, probably like other people, as inevitable in the fourth quarter,” the former IMF economist said on Friday in comments to “Reuters”.
Moreover, he added that a recession would cause eurozone growth to shrink by 0.7% next year, a view considered, in his view, below the consensus. “I would imagine that, on the cash side, hawkish ambitions will be scaled back in the first quarter. In fact, we expect the first cut at the end of the first quarter, heading into the second.”
The European Central Bank’s monetary policy meeting is already taking place on the 8th of September. Goldman Sachs expects a 75 basis point increase after data this week showed new record highs in eurozone inflation. Other banks, such as Nordea and Danske Bank, have expressed expectations for a September rate hike of the same size.
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