Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown:
‘’Stuck between a rock and a hard place, ECB policymakers felt they had little option but to go ultra-big with the rate rise to try and cut the rope on inflation and spark a fall from its ascent. But it couldn’t come at a worse time with Russia’s gas taps to Europe turned off in retaliation for punitive economic sanctions. With energy prices so elevated, bringing an end to the price spiral is going to be far from easy, and the ECB is warning that fresh hikes will be on the way. Business and consumers will be faced with the double whammy of higher borrowing costs and worries about energy security, accelerating the prospects of recession and setting the scene for a bleak winter ahead. The latest fall in the US jobless claims numbers to a three-month low is likely to strengthen the mighty dollar even further, as it underlines the resilience in the American economy, and adds to expectations that the Fed will also step on the pedal of rate rises. This has piled further downwards pressure on the euro, which looks set to head back below parity with the dollar, raising fresh inflationary concerns as it’ll make imports that bit pricier.’’
