Eurozone economy offers growth prospects “weaker” what did he expect European Central Bank When the (ECB) made its June forecasts, it opened the door to lower those forecasts. periodic revision from his actions in mid-September. However, at the same time “indicators” that activity in the currency union “could be” not be on the border from someone deep or prolonged recession“It was confirmed by the Germans on Thursday. Elizabeth SchnabelThe executive director of the institution also argued once again that monetary policy is needed. “restrictive enough” Bringing inflation back to target is important 2% in the medium term.
In other words, the Eurozone economy weight lossbut a major crisis is unlikely, so a sudden stop does not imply necessarily the ECB Lift up your foot of the accelerator their rise official interest rates. That’s why Schnabel insisted on the monetary authority’s message at the end of July: At its meeting on 14 September, make more expensive the current currency’s price is at 4.25% or “can afford it” wait until the next meeting collecting more data on how the brake on aggregate demand is transferred to and from prices Fixing it feesIn other words, even if rates don’t increase in a few weeks, that doesn’t mean they won’t later.
According to this meeting times July, published by the ECB this Thursday, “all members” the governing council supported raising rates 0.25 percent points“Although in the beginning a I prefer not to increase them Given “the risk of a stronger-than-expected spread” from previous increases. some consultants argued that men “more room to fold” Lowering inflation to 2 percent. However others they pointed as “Probably” Inflation forecasts to be published by the central bank within two weeks will reflect that the CPI will fall towards the target. no need to pay more money.
resistant inflation
Schnabel, who has traditionally been among the more orthodox counselors, appears to be at the forefront. “we cannot predict where will it be maximum rate nor how long will they have to remain at restrictive levels. We also cannot make any commitments regarding future actions; this means: we cannot compensate “The need for further tightening of monetary policy today, with the promise of keeping interest rates at a certain level for a longer period of time,” said while attending a conference held in Frankfurt by the ECB and the Cleveland Federal Reserve. The German company therefore rejected this proposal. The position advocated by the other members of the Council go up rates in return keep them high for longer.
After reaching a maximum of 10.6% in October, general CPI Despite a moderate course in the Euro Zone, the situation did not change in August. at 5.3%It’s at the same level as July, as Eurostat reported this Thursday. Indicator core down 5.3%two-tenths less than the previous month, but slightly below the maximum reached in March (5.7%). So it continues at a certain level “stubbornly long”, According to Schnabel. attribution economyThe index, which fell by 0.1% in the fourth quarter of 2022 and remained stable in the first quarter of this year, recovered by 0.3% in the second quarter. However, the latest data shows that it may contract by 0.2% in the third month. HE unemploymentcontinues on its own behalf record lows (6.4%).
The ECB adviser emphasized that the euro area economy shows in this context. “extraordinarily challenging” initially for purposes occupation of Ukraine thanks to Russia government measures Compensation for the increase in the cost of energy due to the fact that it has not yet arisen blocked request during the epidemic. However, he said the situation has worsened in recent months. “constantly running out”as evidenced by the activities and future orders of the sectors manufacturer And Services. In addition, he added: fiscal policy is happening more restrictive As governments withdraw support measures against rising energy prices. Employment also signals this. weakeningdespite marking unemployment minimums.
rocket explosion effect
Regarding the positive indicators that rule out a deep recession, Schnabel emphasized: improving confidence consumers. He stated that this was due to the fact that he was “upgraded”. salary increase And cheaper energycompensating for an ever-increasing portion of the loss purchasing power This caused the inflation shock of the last two years. According to him, this to support consumption special in the future. Of course, he warned that the contraction in bank loans caused by the rise in interest rates will increase.even more in the coming monthsalbeit at a slower pace.
The ECB executive also stressed that: high uncertainty how is this will develop inflation as the reason for the central bank not to tie its hands in the medium term. Among other factors, he stated: companies are rapidly transferring its increase costs by price charging consumers, but it’s not the same when these costs come down. “Proportion of companies currently planning to do so lowering prices This is nowhere near the proportion of firms aiming to increase marginal costs as they rise. Producer and import prices fall now they have risen faster than before,” he stressed.