The regulatory authorities’ fight against inflation shows no sign of slowing down, and the Organisation for Economic Co-operation and Development (OECD) has stepped up the pressure, causing further concern among those with mortgages.
According to the OECD’s outlook, the European Central Bank (ECB) will raise interest rates several more times at this year’s meetings, and it won’t be until 2024 that we’ll see the light at the end of the tunnel with possible cuts.
“It will take several quarters of positive prospective real interest rates and below-trend growth to sustainably reduce resource pressures and achieve sustained disinflation, particularly when demand pressures are a major source of inflation,” writes the OECD.
If the ECB continues to raise interest rates by 25 basis points at its next meetings (scheduled for June 15, July 27 and September 14), it will reach a maximum of 4.25%.
“In most countries, benchmark interest rates should have peaked or are expected to peak in the coming months. Once inflation has slowed and converged towards central bank targets, prime rates could start to fall in 2024 in some jurisdictions,” they explain.
In the eurozone, where underlying inflation remains high, the main refinancing rate should peak from the third quarter of 2023 and remain unchanged until the end of 2024, the OECD estimates.
The OECD Outlook data show that the impact of monetary policy tightening has begun to be felt in financial and real estate markets, although no clear signs of a persistent fall in core inflation have yet been observed.
