Skip navigation Scroll to top
Scroll to top

LGT Navigator: ECB steps up fight against inflation

September 9, 2022

The European Central Bank (ECB) met market expectations and raised its key interest rate by 75 basis points as expected. With this move, the ECB is sending a clear signal in the fight against the further increase in inflationary pressure. ECB President Lagarde also emphasized that further interest rate steps are to be expected. On capital markets, the interest rate decision was expected to be of this magnitude and therefore caused only relatively moderate price fluctuations. Fed Chairman Powell underlined the importance of keeping inflation expectations anchored. In this regard, he said, the Fed would continue its efforts to curb inflation until the job was done.

ECB steps up fight against inflation

On Wall Street, the recovery continued, but remains marked by central bank policy. Support was provided by bank stocks, which benefited from the prospect of rising interest rates. The Dow Jones Industrial closed +0.61% higher at 31'774.52 points and the S&P 500 gained +0.66% to 4'006.18 points. On the Nasdaq, the indices rose by about +0.5%. The yield of ten-year US government bonds climbed to 3.32% after the interest rate decision of the ECB.

The markets in the Asia-Pacific region also rose at the end of the week. In Japan, the Nikkei 225 rises by about +0.5% and in South Korea, the Kospi gains +0.4%. Strongly performed on Friday the Hang Seng Index in Hong Kong, which is up +2.6%. On the Chinese mainland, the Shanghai Composite rises by +0.7%. Positive impetus was provided by the latest inflation data from China. Thus, inflationary pressure in China has surprisingly weakened in August. Consumer prices rose over the year by +2.5% and producer prices increased by +2.3% relatively moderate. This is likely to be due to lower consumption. This gives the Chinese central bank scope for further interest rate cuts to support the domestic economy.

ECB sends a clear signal with the biggest interest rate hike in its history to date

With the increase of 75 basis points, the key interest rate at which commercial banks in the euro area can borrow fresh money from the ECB rises to +1.25%. The so-called deposit rate was raised to +0.75%. According to the ECB, the rate move “accelerates the transition from the current very accommodative level of policy rates to a level that ensures the timely return of inflation to the two percent medium-term objective.” With inflation expected to remain at high levels for longer, according to the ECB, ECB chief Lagarde held out the prospect of further rate hikes in the coming months. The inflation rate in the eurozone recently reached a record level of 9.1%. In view of the continuing pressure on energy prices, inflation must be expected to reach double digits in the coming months, Lagarde stressed.

ECB projections: Higher inflaiton and lower growth

According to the ECB, the inflation rate in the eurozone is expected to rise further. In its forecasts published yesterday, the central bank now expects an inflation rate of +8.1% this year, compared with the +6.8% still anticipated in June. Next year, inflation is then expected to fall to an average of +5.5% (June forecast: +3.5%). For 2024, the ECB still forecasts annual inflation of +2.3% (+2.1%). At the same time, the euro economy will grow more strongly in the current year than previously expected, namely by +3.1% (June forecast: +2.8%). In the following two years, however, a clearly weaker GDP growth rate of +0.9% (previously +2.1%) and +1.9% (+2.1%) is expected.

Economic Indicators September 9

MEZ Country Indicator Last period
08:45 FR Industrial Production (July, m/m) +1.4%


Earnings Calender September 13

Country Company Period
US Twitter extraorord general meeting
US Starbucks Investor Day


LGT helps you make informed investment decisions

All about global economic and market trends at a glance

Subscribe to LGT's research newsletters

You can also follow us on Facebook or LinkedIn – or visit MAG/NET and discover interesting background articles. If you have questions, a consultant from the bank will be happy to help you.


Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi, E-Mail:
Source: LGT Bank (Switzerland) Ltd.


Risk Disclosure (Disclaimer)
This publication is an advertising material / marketing communication. This publication is intended only for your information purposes. It is not intended as an offer, solicitation of an offer, or public advertisement or recommendation to buy or sell any investment or other specific product. The publication addresses solely the recipient and may not be multiplied or published to third parties in electronic or any other form. The content of this publication has been developed by the staff of LGT and is based on sources of information we consider to be reliable. However, we cannot provide any confirmation or guarantee as to its correctness, completeness and up-to-date nature. The circumstances and principles to which the information contained in this publication relates may change at any time. Once published information is therefore not to be interpreted in a manner implying that since its publication no changes have taken place or that the information is still up to date. The information in this publication does not constitute an aid for decision-making in relation to financial, legal, tax or other matters of consultation, nor should any investment decisions or other decisions be made solely on the basis of this information. Advice from a qualified expert is recommended. Investors should be aware of the fact that the value of investments can decrease as well as increase. Therefore, a positive performance in the past is no reliable indicator of a positive performance in the future. The risk of exchange rate and foreign currency losses due to an unfavorable exchange rate development for the investor cannot be excluded. There is a risk that investors will not receive back the full amount they originally invested. Forecasts are not a reliable indicator of future performance. In the case of simulations the figures refer to simulated past performance and that past performance is not a reliable indicator of future performance.

The commissions and costs charged on the issue and redemption of units are charged individually to the investor and are therefore not reflected in the performance shown. We disclaim, without limitation, all liability for any losses or damages of any kind, whether direct, indirect or consequential nature that may be incurred through the use of this publication. This publication is not intended for persons subject to a legislation that prohibits its distribution or makes its distribution contingent upon an approval. Persons in whose possession this publication comes, as well as potential investors, must inform themselves in their home country, country of residence or country of domicile about the legal requirements and any tax consequences, foreign currency restrictions or controls and other aspects relevant to the decision to tender, acquire, hold, exchange, redeem or otherwise act in respect of such investments, obtain appropriate advice and comply with any restrictions. In line with internal guidelines, persons responsible for compiling this publication are free to buy, hold and sell the securities referred to in this publication. For any financial instruments mentioned, we will be happy to provide you with additional documents at any time and free of charge, such as a key information document pursuant to Art. 58 et seq. of the Financial Services Act, a prospectus pursuant to Art. 35 et seq. of the Financial Services Act or an equivalent foreign product information sheet, e.g. a basic information sheet pursuant to Regulation EU 1286/2014 for packaged investment products for retail investors and insurance investment products (PRIIPS KID).