Essentials of Monetary Policy
Rates Raised Another 50 Points Despite the Recent Market Turmoil
March 16, 2023
The tensions that have recently emerged in the financial system add a lot of uncertainty and could have prompted the ECB to be more cautious. Lastly, the still-too-high inflation justified further monetary tightening.
If financial tensions ease, the ECB is likely to continue monetary tightening, but if the situation worsens, it may want to take a more cautious approach. For now, we expect two more 25-basis-point increases by the summer.
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