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The ECB Joins The Mega Rate Hike Club!

The ECB joins the rate rise club, with a 50 basis point hike – which was bigger than expected by the markets. They expect inflation to hang around, and they expect further normalization ahead.

So this marks the end of the negative interest rate experiment, other than in Japan, Denmark and Sweden. Banks will see profit uplifts as a result.

But the result will be higher rates around the world – until something breaks…

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Written by Walk The World

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  1. Hi Martin. Could you explain how banks profitability increase when rates rise? In my simplistic way of looking about it, I understood that banks make a margin on top of the cash rate. Whilst interest rates increase with the cash rate, the margin would tend to remain similar. If anything, i would have thought that increasing rates would reduce lending capacities, making the bank less profitable.

  2. Even those who took it casually and enjoyed the rate hikes now feel like they are drowning. It's not our RBAs problem. It's a global issue. It's out of control. Quantitative easing is a thing of past. People will die from this tightening cycle. Some People in OPEC countries will end their lives. The sad thing is the kind of situation our kids are going to grow. Our older wealthier population will be the only one safe. Government should actively involve in rent caps and make houses cheap by taxing the hoarders, help builders and developers to get construction faster and cheaper. Move the hoarders and developers to participate in new build housing industry and units.

  3. The most important think anybody can do is believe the exact opposite of anything a central bank or Government says..on everything..don’t even believe the weather forecast.

  4. Cristine Lagarde has a conviction for financial fraud…FACT…I guess that’s why she got the top job at the ECB..she couldn’t gat a job at the checkout at Tesco though..think about that !!!

  5. Would be interesting to get a survey for the following questions. What will be the peak of inflation from the years 2023-24? (a) Between 5%-10%. (b) Between 10%-20% (c) Between 30%-40% (d) Greater than 40%? At what rate should the RBA set the official interest rate in December 2022? (a) Between 2.5-3% (b) Less than 2.5-3% (c)3%-5%? (d) Greater than 5%?

  6. Uh oh….
    "twice the amount telegraphed… predicted by only 4 of 53 economists"
    (The explanation of the TPI seems to be the work of a random word generator.)

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