According to an AI-driven analysis of statements made by all central bankers, the European Central Bank (ECB) is poised to carry out an interest rate hike next week. However, research conducted by the ZEW Institute, as reported by the “Handelsblatt”, casts doubt on the prevalent market assumption that further rate increases are highly probable before the end of the year.
Friedrich Heinemann, a financial expert at ZEW, stated that a hike of the key interest rate-from 2.25 percent to 2.5 percent-is “clearly prepared” given sustained high energy prices and positive economic outlooks. While the consensus among the 27 central bank governors remains relatively high, according to the current “momentum indicator,” that agreement is beginning to fray. Consequently, it is “not as self-evident” as the markets assume that the ECB Governing Council will commit to rapid additional interest hikes.
Although the calculated “momentum score” continues to signal increasing interest rates, the degree of this signal is significantly less pronounced than in the second half of 2022, during which the ECB implemented extensive, quick-succession rate increases up to 4.0 percent. Furthermore, the overall score derived from the speeches has actually dropped slightly since the spring. This suggests a decline in the long-standing dominance of “hawkish” voices-those advocating for higher interest rates.
