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Joachim Nagel, President of the Bundesbank and ECB Governing Council Member discusses the central bank's latest interest rate decision, his outlook for further rate hikes, and the political landscape in Germany.
Borrowing costs soar in Europe and oil tops $105 a barrel as bank flags mounting price pressures in eurozone
The European Central Bank increased interest rates for the second time since the Iran war started, responding to signs inflation is set to stay well above 2%. The deposit rate was lifted by a quarter-point to 2.5%.
Resurgent oil and gas prices have reignited concerns over price pressures.
Long-dated eurozone government bond and Treasury yields edged higher, awaiting the ECB's expected rate hike and the Treasury's first buyback auction with increased volume.
The European Central Bank is set to raise borrowing costs for the second time since the start of the Iran war. The deposit rate will be lifted by a quarter-point to 2.5% on Thursday, according to all but one analyst in a Bloomberg poll.
The ECB is widely expected to raise its key interest rate on Thursday. Eurozone inflation hit 3.3% in August, with energy inflation spiking to 14.3%.
While nearly all observers anticipate a rate hike today, there is dissent among bond markets about the terminal rate for this tightening cycle from the ECB. Much depends on events in the Middle East and their impact on energy prices and inflation.