With the European Central Bank about to hold its monthly policy meeting, economists are predicting no interest rate change this month, but most expect the bank to signal further raises to come with at least one this year. However investors and market analysts doubt that the ECB’s always cautious Governing Council will increase the cost of borrowing until October.
There have been four increases since December- the last one on the 3rd of August – but inflation continues to be higher than the ECB would like, in addition the region’s economy is experiencing its strongest growth in six years and the jobs market is showing signs of recovery.
The ECB’s rate is now at 3%. Earlier this month, the UK rate was also raised to 4.75%, Switzerland recently boosted its rate to 1.5% and Sweden’s central bank has just raised its benchmark interest rate by a quarter-point to 2.5%. Designed to limit inflation and borrowing, It is the fourth increase this year. Sweden’s economy is growing at its fastest pace in more than five years.