The rise in interest rates is nearing its end, but that doesn’t mean they will drop any time soon. governor Bank of SpainPablo Hernández de Cos, at a conference at Cercle Financer in Barcelona, price of money will have to stay in “limited zone”ie current levels, for a “long” time to reach 2% inflation target in a “sustainable over time” manner in the medium term.
During his conference, accompanied by the President of the Fundació La Caixa, isidre faineDescribing himself as “one of our country’s most brilliant economists”, he admitted that monetary policy has “a long way to go”. However, he added that maintaining price stability is the biggest contribution the central bank can make to ensure long-term strong economic growth. Before the CaixaBank CEO speech, Gonzalo Gortazardescribed him as a “capital figure” who stood out with his “political independence” in the control of the financial system, not only in Spain but also in Europe.
most optimistic scenario
Acknowledging that there is still a long way to go after the 25 basis points increase in the price of money earlier this month, Hernández de Cos emphasized: “The scenario for 2023 is a little more optimistic” and dared to say that “the peak of this inflationary era” is over. The Bank of Spain recently announced that it will raise its growth forecast for Spain in 2023 to around 2%, close to the 2.1% it had predicted in the Government’s 2023-2026 stabilization plan update to Brussels. He announced that the expectation of the markets with the March forecasts is that the deposit facility is 3.75% from the current 3.25%.
The governor, however, declared that he remained victorious. uncertainty The resilience of the eurozone economy, the trajectory of the world economy, the effects of the Chinese economy opening up, new outbreaks of financial instability such as those in the US (Silicon Valley Bank) or Switzerland (Credit Suisse). has so far had limited impact.
The European Central Bank (ECB) will take its decisions depending on the development of different data and acknowledged that the increases in interest rates have already begun to be felt in the economy. tightening of financial conditions In fact, access to credit is becoming more complex, and the issuance and flow of credit is reduced. retail deposits due to “excess liquidity in the market”.
Core inflation
and yet inflation “We left behind the peak we reached in November 2022” due to the decrease in energy prices, improvement in supply chains and slowdown in demand, base ratethe most structural, which excludes the most volatile energy and unprocessed food prices, continues to be subject to “continuing high” pressures.
And in turn, salary pressures, increase in wages per employee and per hourwhich were 5% and 4.3% respectively in the last quarter of 2002 compared to 3.9% and 2.9% in the third quarter. In Germany it reached 6% in some cases. marginsWhile other indicators based on individual company data show a more moderate behavior, they are increasing “strongly” in some sectors.