economy
‘A big mistake’: The ECB is ‘hell-bent’ on rate hikes despite recession risks, senior economist warns
Berenberg's chief economist said ECB rate rises would be a "big mistake" amid growing signs of European stagflation.
TL;DR
- Holger Schmieding, chief economist at Berenberg, warns the European Central Bank (ECB) against hiking interest rates.
- He believes such a move risks tipping Europe into recession, given existing stagflationary pressures.
- Schmieding argues that weakening demand due to high energy costs should naturally curb inflation, negating the need for aggressive tightening.
- The ECB is expected to increase rates at its June 11 meeting, despite inflation at 3% for April.
- Laura Cooper of Nuveen suggests the ECB might pursue "insurance" hikes, but warns of underpricing growth deterioration and the risk of tightening into weakening demand.