Market Information Friday 16 December 2022

The European Central Bank raised interest rates by 50 basis points on Thursday as expected by markets. The bank’s governing council believes that interest rates will need to continue to rise at a steady pace to ensure that inflation returns to the 2% target. The central bank also warned of a possible contraction of the euro area economy in the current and next quarter due to the energy crisis, high uncertainty, weakening global economic activity and tighter financing conditions.

The National Institute of Statistics and Economic Studies (INSEE) stated on Thursday that the French economy is expected to contract slightly this quarter due to refinery strikes and nuclear reactor outages.  Economic activity in France is expected to recover in the first half of next year. The latest GDP forecast for the fourth quarter of 2022 would result in a growth of 2.5% for the year 2022, slightly lower than the 2.7% expected by the government in its budget planning.

The Bank of England raised its key interest rate to 3.5% from 3% on Thursday, its ninth rate rise in a row. The BoE stated that it tries to speed inflation’s return to target, after price growth hit a 41-year high in October. The BoE further stated that the labour market remains tight and there has been evidence of inflationary pressures in domestic prices and wages that could indicate greater persistence. In their opinion this justifies a further forceful monetary policy response.

The 6M Euribor increased with 4 basis points to 2.52% compared to previous business day. The 10Y Swap increased with 12 basis points to 2.72% compared to previous business day.

In the attachment, today’s market data on money and capital market rates as well as other rates are presented.