ECB Hikes Deposit Rate by 25 Basis Points to 4%

The video discusses the volatility in market sentiment influenced by reports from Reuters and Bloomberg about the European Central Bank's (ECB) inflation expectations for 2024. It highlights the importance of transmission in the ECB's rate hike decision-making process. The ECB's decision to hike rates is seen as a balancing act, especially as the economy faces a downturn, affecting not just Germany but spreading across the euro area and into services. The ECB aims to maintain restricted monetary policy levels despite these challenges.

What does the term 'transmission' refer to in the context of the economic decisions discussed?

What scenario did the European Central Bank aim to avoid when they started hiking rates?