# Euro zone services booming but sentiment recovery may have stalled -ECB’s Lane
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-04-19
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Euro zone services booming, but sentiment recovery may have
Meta Description: ECB's Lane says growth in euro zone services is still accelerating but sentiment recovery may have stalled, mixed developments reported. Markets anticipate
URL: https://financedigest.com/euro-zone-services-booming-but-sentiment-recovery-may-have-stalled-ecbs-lanehtml

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# Euro zone services booming but sentiment recovery may have stalled -ECB’s Lane

DUBLIN (Reuters) -Growth in services across the euro zone is still accelerating but the steady improvement in business and consumer sentiment may have stalled, European Central Bank chief economist Philip Lane said on Wednesday, calling recent developments mixed.

The ECB has raised interest rates at its past six meetings and said that unless the economy starts developing differently than it predicted last month, more increases will be needed to curb inflation.

“The expansion of services business activity is accelerating, supported by a continuation of strong reopening effects and rising incomes, whereas manufacturing output stagnated in the first quarter of the year,” Lane said in Dublin.

Incoming survey indicators suggest that the steady improvement in [business and consumer](https://www.financedigest.com/citigroup-says-will-close-russian-consumer-commercial-business.html "Citigroup says will close Russian consumer, commercial business") sentiment, which remains at low levels, may have stalled,” he added.

Markets are now betting on a 25-basis-point interest rate [hike](https://www.financedigest.com/oil-dips-as-potential-fed-rate-hike-overshadows-falling-stocks.html "Oil dips as potential Fed rate hike overshadows falling stocks") at the ECB’s policy meeting on May 4 but investors see a one-in-three chance of a 50-basis-point increase before rates rise further in subsequent meetings.

The peak in rates is seen just below 4% and Lane said that once the benchmark [rate hits](https://www.financedigest.com/uk-inflation-hits-9-4-bolstering-bets-on-big-boe-rate-hike.html "UK inflation hits 9.4%, bolstering bets on big BoE rate hike") a plateau, it will stay there for an extended period before cuts are possible.

He also noted that once [rates come](https://www.financedigest.com/russias-2022-inflation-seen-at-13-4-more-rate-cuts-to-come-reuters-poll.html "Russia’s 2022 inflation seen at 13.4%, more rate cuts to come: Reuters poll") down, they could stabilise around 2%, not returning to sub-zero levels.

(Reporting By Padraic Halpin, writing by Francesco Canepa in Frankfurt; Editing by Emelia Sithole-Matarise)


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