![ECB: Crucial meeting in Athens – What will happen to interest rates](https://www.ot.gr/wp-content/uploads/2023/10/ot_stournaraw_lagarde2.png)
The European Central Bank (ECB) is preparing to put a “freeze” on interest rate increases.
The two-day meeting of the Governing Council of the ECB begins today in Athens, hosted by the Governor of the Bank of Greece (BoG), Giannis Stournaras.
How ΒοG Gov Stournaras welcomed Christine Lagarde το Athens
The governors of the national central banks of the euro area countries and the six members of the ECB’s Executive Committee will meet in the central building of the Bank of Greece and take their decisions on monetary policy.
After the end of the meeting, there will be a press conference during which the President of the European Central Bank (ECB) Christine Lagarde, assisted by the Vice-President of the ECB Luis de Guidos and the Governor of the Bank of Greece Giannis Stournaras, will explain the decisions on monetary policy.
The Governing Council of the ECB meets in person at the ECB headquarters in Frankfurt or remotely, while once a year the meeting is hosted by a national central bank. This is the third consecutive hosting of the meeting of the Board of Directors of the European Central Bank (ECB) at the Bank of Greece, after 2005 and 2008.
Interest rates
According to most analysts, it is expected to halt the most aggressive rate hike in its history.
However, with eurozone inflation running at twice its target and the Israel-Hamas conflict pushing up energy prices, ECB President Christine Lagarde is expected to make it clear that interest rates are likely to remain at their current level or even risee further over a period of time.
Most investors, considering this year’s near-stagnation of the eurozone economy and the downward trajectory of inflation, consider the chances of further increases in eurozone interest rates to be minimal
However, the idea that euro interest rates will remain higher for longer than expected earlier this year is gaining ground, despite signs that the region’s economy appears stagnant.
Reacting to a double-digit rise in Europeans’ living costs, the biggest in a generation, the ECB raised borrowing costs at 10 consecutive meetings, raising the key deposit rate from a record low of minus 0.5% to a record high of 4%.
But officials remain tight-lipped about how long it will take to complete the “last mile” of their journey to return inflation to their 2% target.
Lagarde said this month that price pressures remained “undesirably high”, despite falling to a near two-year low of 4.3% last month.
Eurozone business activity data was released yesterday, which unexpectedly worsened this month as demand weakened. S&P Global’s preliminary HCOB Composite Purchasing Managers’ Index (PMI), which is considered a good indicator of how businesses in the manufacturing and services sectors are doing, fell to 46.5 in October from 47.2 in September , the lowest since November 2020. Excluding the months with the Covid-19 pandemic, it was the lowest since March 2013 and also well below the 50-point threshold that separates growth from contraction.
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