Editorial & Advertiser disclosure

Global Banking and Finance Review is an online platform offering news, analysis, and opinion on the latest trends, developments, and innovations in the banking and finance industry worldwide. The platform covers a diverse range of topics, including banking, insurance, investment, wealth management, fintech, and regulatory issues. The website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website.

ECB should not raise rates in July before Q2 GDP data: Panetta

Published by Wanda Rich

Posted on May 5, 2022

Featured image for article about Top Stories

MILAN (Reuters) – The European Central Bank should not raise interest rates in July, even though the inflation outlook suggests it can gradually reduce support for the economy, ECB board member Fabio Panetta told Italian newspaper La Stampa.

While an increasing number of ECB policymakers are making the case for a rate hike at the July 21 policy meeting, Panetta pointed to the availability after it of data on the euro zone’s second-quarter economic growth.

“It would be imprudent to act without having first seen the hard numbers on GDP for the second quarter and to discuss further measures without a full understanding of how the economy could develop,” La Stampa on Thursday quoted Panetta as saying.

“It does not make much of a difference whether it is two or three months earlier or later,” he said in the interview with the newspaper.

Financial markets financial markets have priced in 20 basis points of moves in July.

Considered one of the more prominent policy doves on the ECB’s rate-setting Governing Council, Panetta has long advocated caution in removing support for the economy, worrying that acting too quickly could undermine years of effort at rekindling inflation.

Euro zone consumer prices are soaring, however. In April they were 7.5% higher than a year earlier, and even underlying inflation is nearly twice the ECB’s 2% target. This has prompted many of Panetta’s colleagues to advocate faster ECB action.

Even Panetta made the case for an eventual increase in the ECB’s key rate, which has been negative since 2014.

“With medium-term actual and expected inflation around 2% we can gradually reduce the level of monetary accommodation,” he said.

The ECB will next meet on June 9, when it is likely to decide to end bond purchases, known as quantitative easing, at the end of June. It may also provide clues about its first rate hike in over a decade but no decision on rates is seen as likely then.

(Reporting by Federico Maccioni, Writing by Balazs Koranyi; editing Maria Pia Quaglia and Bradley Perrett)