November 26, 2021

Eurozone’s October inflation rate hit a 13-year high of 4.1%, well above the European Central Bank’s 2% target, prompting some investors to bet that the European Central Bank will raise interest rates next year. But the Council of the European Central Bank believed that many of the factors driving inflation higher this year may subside next year, albeit at a slower pace than recently predicted.

Although the possibility of raising interest rates at the earliest next year is small, investors can still look forward to the European Central Bank’s December meeting. Most people expect that the central bank will decide on the 1.85-ton bond purchase plan launched last year in response to the epidemic and stop new purchases in March 2022.

As a compromise between the doves and the hawks, the European Central Bank continues to expect to supplement the monthly pace of the asset purchase plan of 20 billion euros with a fixed-scale envelope of approximately 200 billion euros. In addition, the European Central Bank also proposed a new bond purchase plan that can cope with market fluctuations.