this The European Central Bank (ECB) has its foot in the accelerator. combat against inflationary spiral. The governing council returned this Thursday raise rates Official interests of the eurozone 0.75 percent pointswhich is the reference rate for financing households, companies and households. stays at 2% (highest level since January 2009). fees mortgage and types new loansTherefore, the climb that started at the end of last year will continue.
The monetary authority agreed what the market expects and analysts climb again extraordinary which already applied last September. It later increased the rates by 0.75 points. highest walk inside 23 years of history your institution. At the end of July, the organization headed by Christine Lagarde started to increase the price of money with an increase of 0.5 points. first in 11 yearsThe biggest in over two decades, and twice what he expected at the June meeting.
“With this third consecutive major increase in official rates, the governing council has significant progress in the reversal of the harmonious orientation of monetary policy, he assured the organism, but nevertheless confirmed it. will continue to raise the price of money despite its impact on already declining economic activity. ” inflation ruins too high and it will stay on target for a long time,” he justified.
End of free financing
The ECB also took two measures to start shrinking its balance sheet, which also tightened the financing conditions of economic units. So, he decided to do it. ultra cheap financing In order to contribute to banks during the pandemic process, make the loan even more expensive customers, thereby cooling demand. Accordingly, these liquidity injections will have an interest equivalent to the average of the three official rates (2%, 2.25% and 1.5%). Between June 2020 and last June, the rate climbed to -1% (banks returned less than they took), then to 0% and to 0.75% in September.
This too will end ‘heavenly benefits’ Banks can now take this ultra-cheap financing from the ECB and invest it in the structure with an interest rate (deposit facility at 1.5% after this rise), which turns from negative in July to positive in September. Thursday). In addition, the monetary authority decided to give banks more windows to repay this debt in order to reduce their balance, and also approved that all minimum reserves that institutions must deposit at the central bank be paid accordingly. up to the rate of the said deposit facility (1.5%) instead of the general rate (2%).
without ceasefire
Thus, the central bank, which started to increase interest rates, later than others Central banks, such as the US Federal Reserve, accelerated rise before a inflation increase like its counterparts in other countries, it branded it as a temporary phenomenon in 2021. this occupation of Ukrainehowever, it took the price increase beyond all expectations and no respite to monetary authorities.
this Eurozone CPI reached in september 10. all-time high The last 11 months, up from 9.1% in August at 9.9%. In September, the ECB revised its inflation forecasts “significantly higher”. guess now 8.1% on average in 2022It is 5.5% in 2023 and 2.3% in 2024, compared to 6.8%, 3.5% and 2.1% calculated in June. prices, so get away from your goals (2% in the medium term) at the end of the three-year scenario on which it bases its decisions.
stagnation drums
this economic activity suffers Consequences of inflation and interest rate hikes. despite unemployment Eurozone’s lowest level (6.6% in August) and GDP continues to grow (0.8% in Q2 vs. previous year), some leading indicators activities of different economic sectors. contraction. In its July forecasts, the ECB calculated that the euro area economy would grow 2.8% this year and 2.1% next year and in 2024, but in September 3.1%, 0.9% and 1.9%respectively.
And this is center stage. Inside negative (Includes total cutoff of gas supply from Russia and other suppliers and apportionment in energy consumption), GDP next year recession (2.8%, -0.9% and 1.9%).