Process accelerated rise Official interest rates starting last July, unless something goes wrong, last stretch, although its size has not yet been determined. Christine Lagarde, head of the European Central Bank (ECB), assured on Thursday that her body was already conducting an operation. “substantially” Work needs to be done to return the eurozone CPI to 2% in the medium term, and that’s the rest. “a distant road”. On the other hand, in the press conference he held after the last interest rate hike last March, he stated that it still exists. “Much more floors to cover”.
The banking storm a few weeks ago brought it to light once again. the struggle of two souls Coexisting within the ECB: that of those advocating a flexible and broad interpretation of its mandate that takes more account of the economic situation (‘pigeons‘) against those who advocate adhering to the goals of achieving price stability (‘Hawks‘). It seems certain that the monetary authority of the euro is certain.it will be more expensive the price of money in your pocket may meetingbut there is more doubt as to whether it will raise rates again. like june july and to what extent.
among the moderates Governor of the Bank of Italythat’s exactly what Ignazio Visco warned about this Thursday,” risk of doing too much At least it’s like doing very little.” financial turmoilhighlighted, “you can come back”hence the importancedecide by meeting Pablo Hernández de Cos, Governor of the Bank of Spain, made a similar statement in the past weeks. Dutch BankKlaas Knot argued that this is “It’s too early to talk about a break” He was in favor of raising interest rates in June and July.
Credit awaits
lagardeplaying a more intermediate role, I did not want to specify for how long or how high rates can rise: path length will depend on a number of factors, particularly credit effect “The financial problems we see”. This is an important factor. Financial turmoil they become more expensive and harden access to credit, shrinkage effect on Inflation without the need to raise interest rates. “If tensions continue or rise, it could lead to a more significant tightening in credit terms than expected and undermine trusta, which also leads to a scenario more moderate economic growth and a faster drop in inflation,” he said.
The ECB, in full, released this Thursday minutes of the last meeting It was at its board meeting in March that it raised interest rates by the expected 0.5 percentage point to 3.5% despite the bank storm. As it turns out, “a very large majority” of the directors supported the rise Recommended by chief economist Philip Lane, “for instill confidence and avoid creating further uncertainty in financial markets”. However, “some members” advocated by the council don’t raise rates waiting and reminding that the tension in the financial markets will subside”past episodes that the governing council raised interest rates and soon after reverse climbWith reference to the increase approved under its mandate, Jean-Claude Trichet at the dawn of the previous financial crisis.
Given these contradictions, managers agreed not to communicate what they plan to do at the next meetings, as opposed to what happened at the last meetings. However, some “to worry because there is no such orientation interpretable as an indication that the ascension cycle was ending“. For this reason, it was suggested in the minutes to give the message that the ECB would “express its expectation that it would increase the interest rates even more” had it not been for the recent turbulence in the markets.