At present, the trend of increased corporate profits has been maintained, and there seems to be few signs of adverse effect on the real economy. Needless to say, however, we remain watchful of stock market developments and their potential ramifications.
The € forward rate ten years out is around 240 basis points above its pre-pandemic level, without policy rates having yet moved. One-year forward real rates, one-year ahead and five-year forward real rates, five-years ahead are around 100 and 140 basis points higher, respectively. Beyond September, the Governing Council has agreed that a “gradual but sustained” path of further rate increases will be appropriate.