{ "docId": "019dd923-5ddf-7308-8fca-7b61f3168a4d", "docSlug": "f28e8659de6897f4", "documentTitle": "What if the ECB raises its policy rates? Roland Berger Institute", "authorId": "RolandBerger", "authorName": "Roland Berger", "documentKindSlug": "consulting-deck", "documentKindLabel": "Consulting deck", "sourceTypeSlug": "strategy_consulting", "sourceTypeLabel": "Strategy consulting", "presentationDate": null, "orientation": "landscape", "aspectRatio": 1.333, "pageNumber": 9, "pageCount": 11, "prevPage": 8, "nextPage": 10, "slideType": "industry_trends", "function": "analyze_data", "density": "overcrowded", "nDataPoints": 3, "notes": "The chart shows a historical period of policy rate hikes between 2006 and 2011.", "elementsJson": [ "headline_text", "paragraph", "line_chart" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-5ddf-7308-8fca-7b61f3168a4d/9", "deckHref": "/decks/019dd923-5ddf-7308-8fca-7b61f3168a4d", "deckJsonHref": "/decks/019dd923-5ddf-7308-8fca-7b61f3168a4d.json", "deckAnchorHref": "/decks/019dd923-5ddf-7308-8fca-7b61f3168a4d#slide-9", "components": [ { "bbox": null, "kind": "callout", "text": "Hence, if the ECB announces an upcoming increase in its policy rates, this communication has a direct effect on the expectations of market participants.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd951-e591-76ed-beb9-e5efbdabda50", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.6, "w": 0.6, "x": 0.35, "y": 0.23 }, "kind": "chart", "text": "AVERAGE FINANCING COSTS FOR HOUSE PURCHASES AND CORPORATIONS AND POLICY RATES [%]", "attrs": null, "subkind": "line", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "cd523c55-7e92-4ade-9805-fe9d67cc53e3", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "metric", "text": "Interest rate: 0.0", "attrs": null, "subkind": "primary", "toolName": "Quantification", "toolSlug": "quantification", "confidence": null, "componentId": "019dd951-e591-76ed-beb9-ea4b0ba4ae89", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.33, "x": 0.04, "y": 0.63 }, "kind": "paragraph", "text": "Hence, if the ECB announces an upcoming increase in its policy rates, this communication has a direct effect on the expectations of market participants. This in turn can lead to rising yields on the bond market, which increases the refinancing costs of banks. Banks pass on this cost increase to customers in advance of the policy rate hike.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "3e300763-ee62-4d07-9f50-b2a44f0bdee9", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.33, "x": 0.04, "y": 0.49 }, "kind": "paragraph", "text": "So far, average lending costs already increased before the central bank raised its policy rates. This is because banks do not obtain all their funding from the central bank but also refinance themselves via market instruments such as bonds and customer deposits.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "819642da-72b7-4b6d-8b5d-9c1c56a87b43", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.33, "x": 0.04, "y": 0.35 }, "kind": "paragraph", "text": "The ECB's policy rate has only an indirect impact on long term bank lending rates: In order to grant loans, banks must obtain funding. To do this, they have various options. Among other things, banks can refinance themselves on the interbank market, with central banks or via secure bonds.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "a4c0387f-6b7c-4c03-b503-cb29822205ba", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.1, "w": 0.33, "x": 0.04, "y": 0.23 }, "kind": "paragraph", "text": "When the policy rate moves, it is often stated that bank lending rates will follow suit. However, forecasts as to when and to what extent are usually vague: The interrelationships are complex, making accurate predictions difficult.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "f7e305c5-cd47-4fa3-a5d4-cbe2a6424a8e", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.02, "w": 0.05, "x": 0.35, "y": 0.91 }, "kind": "source-note", "text": "Source: ECB", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "6c89323c-5726-41c0-a0e0-1c87142cf24d", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.9, "x": 0.04, "y": 0.1 }, "kind": "title", "text": "Usually financing costs for the real economy have risen fairly linearly with key interest rates in the past", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "5abe4074-5d94-48ef-819b-753ef38ef871", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [], "arcBeats": [], "loops": [ { "to": 10, "from": 2, "name": "Cost Of Inaction", "slug": "27-cost-of-inaction", "bestFor": "Urgent budget requests, compliance, risk mitigation", "matchId": "22e5352e-33c3-4cb3-9c73-8d041dfc76cd", "evidence": "The document presents the potential consequences of the ECB's policy rate hike, implying that inaction could lead to higher inflation.", "position": 0, "objective": "to understand the potential consequences of the ECB's inaction", "structure": "The Status Quo -> The Hidden Costs Accumulating -> The Future State of Inaction -> The Tipping Point", "confidence": 0.6, "description": "Quantify what happens if the audience does nothing" } ], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }