Fund managers respond to the ECB's rate increase

Thursday, the European Central Bank announced an increase in interest rates from 75 basis points to 1.9% in an effort to curb inflation.

The daily increase is the greatest since 2009. The move comes amid record inflation in the region. The bank stated, "Inflation remains far too high and will remain over the objective for a considerable amount of time."

In September, eurozone inflation increased to 9.9% from 9.1% in August. This is five times the ECB's aim. Due to these worrying inflation data, Charles Hepworth, investment director at GAM Investments, stated, "it was almost certain that they would aggressively raise rates by 0.75 percent today."

If inflation remains "far too high," the ECB may take additional strong measures at its December meeting.

The central banks of 19 nations issued the following statement: “The Governing Council took today’s decision and expects to raise interest rates further to ensure the timely return of inflation to its 2% medium-term inflation target.”

Neil Birrell, fund manager at Premier Miton Investors, stated in response to the ECB's essential action, "Let's be clear, inflation is the primary fear, not recession, and conquering it is the most crucial battle to win."

In contrast, Gurpreet Gill, macro strategist at Goldman Sachs Asset Management, stated, “Today’s rate decision confirms that the ECB remains focused on strengthening core inflationary pressures, including rising rental costs, which are at a 14-year high.”

By fLEXI tEAM