[Institution: ECB Rate Hike Likely to Have Minimal Effect] Simona Mocuta, an analyst at State Street Investment Management, noted in a report that the European Central Bank's decision to raise interest rates is likely to have minimal effect. The chief economist stated that, contrary to policy objectives, tightening monetary policy could lead to economic weakness—a move more likely to harm economic growth than alleviate inflation. "In fact, rate hikes are unlikely to effectively counteract inflationary pressures triggered by supply shocks," she said. Given that wage inflation is already well under control and consumer confidence and spending remain weak, the scope for a second round of inflationary effects is very limited. Meanwhile, the institution believes that the central bank is most likely to raise rates again this fall.
