As in much of the world, euro zone inflation has soared on skyrocketing energy prices and supply chains still healing from the coronavirus pandemic have taken a further hit from Russia’s invasion of Ukraine.It will average at a peak of 9.6% this quarter, higher than thought last month, before gradually drifting down but will not reach target until late 2024, the poll found.
“The worst impact of the energy crisis on the household sector will develop in Q4 2022 and Q1 2023, when the demand for gas is seasonally higher,” said Luca Mezzomo at Intesa Sanpaolo. Three-quarters of respondents to an additional question, 27 of 36, said the bank ought to choose a 75 basis point lift to the deposit rate while two said it should go harder with a 100 basis point increase.The ECB’s first increase did not come until July, when it added 50 basis points to all its rates – taking the deposit rate to zero, its first time not in negative territory since 2014 – and followed that up with a 75 basis point lift in September.