ECB raises fears of further interest rate hikes as 300,000 people told of increased follow-on payments

A European Central Bank official has rekindled fears of further big interest rate hikes on the same day that many of Ireland’s 300,000 households on tracker mortgages received their first notice of the extra money they will have to pay after interest rates rise. month.

The ECB raised interest rates for the first time in 11 years at its July meeting, which meant Irish banks had to tell their tracker mortgage borrowers within four weeks that their mortgages were automatically rising in tandem with the increase of half a point agreed by the central bank.

Numerous customer notifications arrived on Thursday.

It had been hoped that the ECB, at its next meeting in September, would temper the pace of its rate hikes as the central bank, along with other central banks around the world, tries to tame inflation.

Sharp rise in interest rates

However, ECB board member Isabel Schnabel said in an interview that the outlook for eurozone inflation had not improved since July’s rise, suggesting she favored a another significant hike in interest rates next month, even as recession risks intensify.

“In July, we decided to raise rates by 50 basis points because we were concerned about the outlook for inflation,” she told Reuters.

“The concerns we had in July have not been allayed…I don’t think that perspective has fundamentally changed,” she said.

His comments also came on the day the European statistics agency confirmed that Ireland’s inflation rate was 9.6% in July, unchanged from the previous month, and 8.9% for Ireland. entire euro area.

This raised hopes that accelerating price pressures are approaching a peak.

Eurostat’s figures are based on its harmonized measure of inflation, which makes it easy to compare inflation rates across the European Union.

In the past, harmonized rates have been slightly above the consumer price measure, which in the case of Ireland was 9.1% in July.

Professor Kieran McQuinn of the Institute for Economic and Social Research told the Irish Examiner that Irish inflation was likely to peak around current levels.

Germany’s inflation rate during the month was 8.5% and France’s was 6.8%.

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