Worst news for recruiters mortgage loans with variable interest Confirmed by Pablo Hernández de Cos, Governor of the Bank of Spain: Interest rates will stay high “for a long time”at least until inflation hits about 2%.
While Hernández de Cos made this strong statement in his speech titled ‘Economic situation and monetary policy in Europe’, organized by Cercle Financer at the Barcelona headquarters of the La Caixa Foundation, There will be new increases in the price of money at the upcoming meetings of the European Central Bank (ECB).
The governor also stated that The delay in monetary policy will have the expected effect. raise rate this year and beyond“With the peak of this impact in 2024”.
In any event, he reminded that future decisions will depend on available economic data due to a context “as uncertain as the current one”.
slower transmission
De Cos explained that the monetary policy transmission differs from previous periods and that some aspects “will point to a slower transmission than in the past”.
did you remember that The last rate hike was 20 years ago, and since then the economy has undergone changes that affect the transmission mechanism.and the current cycle is preceded by a long period of expansionary monetary policy with unconventional measures that will create a tightening in “unprecedented” financial conditions.
The ECB’s high rate of increase in interest rates is also unmatched.According to the head of the Bank of Spain, it “could have non-linear effects on the economy”.
One of the aspects Hernández de Cos points out is the slowness of repayment of retail deposits; this explains why the yield on these deposits is higher than market interest rates in a period of negative interest rates and abundant available liquidity.
June
Looking ahead to the ECB’s governing council meeting in June, de Cos pointed out that there are “different sources of uncertainty” that will determine macroeconomic developments in the coming quarters.
First factor, doubts The continuation of the savings buffer due to the pandemic and the recovery in demand at the end of the pandemic.
He also pointed ukraine war As a source of uncertainty and doubt about the evolution of the world economy in the coming months, alongside “new epidemics of bank instability” such as the bankruptcy of Silicon Valley Bank or the collapse of Credit Suisse.
Finally, he warned that ending fiscal policies that were approved to contain inflation could support the economy. price increaseespecially in 2024 and demanded that public support measures be temporary and focused on the most vulnerable groups.