Crucial ECB meeting in Cyprus

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The next non-monetary policy meeting of the Governing Council of the European Central Bank will be held on 5 October in Cyprus; an informal gathering will follow the day after.

According to sources, Wednesday’s meeting will be held in Limassol following interest shown by Central Bank of Cyprus governor Constantinos Herodotou to host it, while other Central Bank Governors showed similar interest.

It is also noted that this is an important meeting due to the situation in the European economy and indicates that additional time will be devoted to discussing more extensive strategic issues.

Eurozone inflation zoomed past forecasts to hit 10.0% in September, a new record high that will reinforce expectations for another jumbo interest rate hike next month from the European Central Bank.

The attendance of all the governors of the 19 eurozone countries in Cyprus at a time of so many challenges for the European economy is particularly important for the country, sources stressed.

ECB President Christine Lagarde visited Cyprus in March at the invitation of Herodotou.

During her visit, she met President Nicos Anastasiades and women’s organisations and participated in a conference organised by the Central Bank of Cyprus.

Confidence indicators across the bloc have also been plummeting recently, suggesting that the eurozone may already be in recession with little respite likely until the spring.

September price growth in the 19 countries sharing the euro accelerated from August’s 9.1%, beating expectations for a reading of 9.7%, with some eurozone members experiencing the fastest price growth since the time of the Korean War 70 years ago.

Inflation is still driven mainly by volatile energy and food prices.

That is likely to make uncomfortable reading for the ECB, which targets price growth of 2%, as it suggests that inflation is increasingly being fuelled by excess demand and is at risk of becoming entrenched.

There is a feeling that interest rates may have to go up to contain inflationary pressure.