Vice President of the European Central Bank, Luis de Guindosthinks it is inflation The Eurozone’s general interest rate, which recovered by a tenth to 7% last April, will eventually fall but will see a high level. Core inflation – excluding the impact of energy and fresh food prices – and especially prices of services. That’s one of the messages the Economic Affairs Commission left behind this Thursday. European Parliament as this Wednesday where the Community Steering Committee advocated its withdrawal help the energy crisis to prevent the increase of inflationary pressures in the medium term.
“An important factor for future inflation expectations is fiscal policy. “As the energy crisis subsides, governments should withdraw relevant support measures quickly and jointly to avoid increasing inflationary pressures that will require a stronger monetary policy response in the medium term.” According to De Guindos, eurozone governments should direct their fiscal policies towards making the economy more efficient and gradually reducing the high public debt.
Headline inflation fell to 7% in April from its peak last October, according to the ECB’s diagnosis number two, but core inflation remains high, in part due to pressures on input costs. This adverse risks for inflation, among other things, More than expected growth in wages and profit marginsWith this, there may be a permanent increase in long-term inflation expectations above the 2% target. This downside risksmeanwhile, it is due to a possible reversal of “tension in financial markets” and “weakening demand”, for example, due to a more pronounced slowdown in bank lending or further monetary policy transmission.
This scenario led the ECB to raise interest rates by a quarter point at its last meeting in May and announce a reinvestment pause. asset purchase program from July. De Guindos did not give any clues as to what decisions the meeting body would take at its next meeting, but recalled that they would aim to ensure that “official interest rates are at sufficiently restrictive levels to return inflation to our medium target”. 2% maturity and will remain at these levels as long as necessary.”
“Solid” banking system
According to the banker, the ECB considers the banking system to be “robust” despite tightening financing conditions that are putting companies, households and countries in the Eurozone to the test. Bank failures in the United States and Switzerland. “These impacts were mitigated by the soundness of the fundamentals of banks in the region,” he said. Still, he was concerned about the wild fluctuations in real estate prices, especially commercial real estate, and urged banks to get started. paid deposits. “If we raise interest rates, we raise them for everything: loans and deposits. The bank needs to react,” he warned.
De Guindos also took the opportunity to highlight the “need to strengthen regulations on non-banking entities” and avoid the risk of creating blind spots in the financial system. “Our banking sector is strong, largely thanks to reforms and prudent policies implemented in recent years,” but “recent events should remind us that we need to constantly adapt our regulatory framework to the changing times,” he added, urging governments to complete the banking union. “The best way to maintain stability in the EU is to ensure greater European integration and a strong regulatory framework. In the next twelve months, before the end of this legislative period, we can make tangible progress on some important dossiers.
Source: Informacion
James Sean is a writer for “Social Bites”. He covers a wide range of topics, bringing the latest news and developments to his readers. With a keen sense of what’s important and a passion for writing, James delivers unique and insightful articles that keep his readers informed and engaged.