ECB readies first hike since 2011 as it faces policy ‘trilemma’
Central bank forced to choose among price stability, fragmentation risk and market functioning
On July 21, the European Central Bank (ECB) is overwhelmingly expected to implement its first interest rate increase since 2011.
The institution faces a challenging outlook as inflation continues rising above the 2% target. In June the Harmonised Index of Consumer Prices (HICP) rose year on year by 8.6%, a new record, up from 8.1% in May. Additionally, recession risk in the eurozone keeps on growing due to higher energy prices and the wider impact of the Russian invasion of Ukraine.
“The
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