As expected, European Central Bank (ECB) decided this thursday raise rates concern for others 0.25 points percentages with the main rate at 3.75% (maximum October 2008the dawn of the previous crisis), deposit facility – the rate of interest at which money held by banks is paid, most relevant in the current context – rises at 3.25%. The monetary authority of the eurozone, therefore, endorsed its approval. seventh consecutive rate hike took on the first one after an 11-year hiatus since last July. softer from the end approval (previously it was 0.5 or 0.75 points).
This is why the ECB is facing it. last part of the climb Although it is difficult to estimate the size of the species. your president, Christine Lagarde, He already admitted that he was dumped a few weeks ago. “a distant road” in interest rate hikes. The message confirmed more recent increases in the price of the currency than anticipated at this Thursday’s meeting. left more open What will the ECB do next? The senior French official, in fact, stronger in marchmaking sure that “Much more floors to cover” in interest rate hikes. This was stated after raising them 0.5 percentage points despite the banking storm that started in the United States and reached Credit Suisse in Europe.
Exactly to what extent is the key to your future steps? credit is shrinking As a result of interest rate hikes and financial storm a few weeks ago. financing scarcer and more expensive As a result of bank stress, it makes it less necessary to raise rates to achieve the same effect on the economy. And in the last weeks 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’) compared to those who advocate adhering to price stabilization goals. (“Hawks”).
in this context, Analysts are expected A new 0.25 increase this month in May and maybe later where it could push the official price to a top of 4% and hold steady before cutting back at the end of this year or the beginning of next year. They overlap in pointing out a good portion of the estimates. This Federal Reserve from the USA It raised interest rates by 0.25 (in the 5% to 5.25% range) this Wednesday, leaving the door open for a pause in rate hikes.
inflation and growth
The truth is that, main task The ECB’s purpose is to lower the eurozone’s CPI. 2% in the medium term and current inflation is far from this target. despite the surrender 7% in April (month in which it recorded a slight increase of one-tenth), the call Core inflation – excluding the more volatile prices of energy and unprocessed food – remains very high, at 5.6% (In April it cut one tenth).
In March, the Central Bank revised its forecasts slightly downwards. price predictions for this year (average inflation rate from 6.3% to 5.3%), but for the core rate (excluding energy and food) it raised the estimate from 4.2% to 4.6%. It also stated that both headline inflation (2.9% in 2024 and 2.1% in 2025) and core inflation (2.5% and 2.2%) will remain above their targets (2% over the medium term). guesses. projection horizon that pushes them to continue making money more expensive to further cool the activity. As for the economy, it expects more growth than it predicted in December this year (1% instead of 0.5%), but less growth in 2024 and 2025 (% both years compared to 1.9% and 1.8% in the previous years). 1.6).