Discounted rate hike, watch out for TLTRO changes By

© Reuters

By Alessandro Albano – Market expectations rise for Central Bank of Europe to raise interest rates after September hit 10%, a new record for the short history of the Eurozone.

The Frankfurt bank will announce tomorrow at 2:15 pm CEST, with the commencement starting at 2:45 pm which you can follow live on

In addition to the rise in the cost of the euro, the markets will be watching carefully the possible changes in the conditions of the refinancing operations (TLTROs), which in these ten years of quantitative easing have guaranteed inexpensive long-term liquidity for European banks.

“We expect the ECB to announce two important decisions at its Governing Council meeting on Thursday,” Mirabaud AM Chief Economist Gero Jung wrote in a statement.

On the one hand, the economist expects the main policy rate to rise by 75 basis points to 2%, as will deposit and marginal transaction rates. Second, “changes in bank financing, through the TLTRO” are likely to be announced.

“We expect the lending rate to be set at the deposit rate. These decisions are relatively little controversial. It is important to note that ECB Lagarde’s comments on future stocks, including the neutral rate and the terminal rate, will be subject to be careful, “explains Jung.

According to the Swiss manager, the President of the ECB will emphasize the “meeting by meeting” approach but is unlikely to send “strong political signals on future actions”.

In this sense, adds the expert, “we expect the ECB to be more cautious after the meeting on 27 October, as the ceilings for retail prices will come into force and economic activity is in sharp decline”.

“As far as retail energy price caps are concerned, the current decisions taken by Germany, Austria and the Netherlands will affect more than a third of Eurozone consumers. Furthermore, the latest surveys suggest that the economy has contracted at ‘beginning of the fourth quarter “, finally underlines Gero Jung.

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About Eric Wilson

The variety offered by video games never ceases to amaze him. He loves OutRun's drifting as well as the contemplative walks of Dear Esther. Immersing himself in other worlds is an incomparable feeling for him: he understood it by playing for the first time in Shenmue.

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