The era of cheap money is over. Board of Directors European Central Bank (ECB) announced at its July meeting that it will raise the money price by a quarter point and will raise it again in September. One of the reasons for this is the rapid increase in inflation. In fact, the agency that published the estimates, in reviewing the estimates, “Inflationary pressures expanded and intensifiedwith a strong rise in the prices of many goods and services”.
The new projections of the business foresee: a inflation 6.8% per annum in 2022It’s more than March estimates before it is projected to decline to 3.5% in 2023 and 2.1% in 2024. This means that headline inflation at the end of the projection horizon is expected to be slightly above the Governing Council target. Inflation excluding energy and food is expected to be 3.3% on average in 2022, 2.8% in 2023 and 2.3% in 2024, which is above the March projections.
The road has already been designed. departure inflationIt changed the landscape from being seen as a secondary and temporary phenomenon, becoming more structural, infecting the entire economy. Annual rate of consumer price index (CPI) in the euro area 8.1% in May Rate hike this summer.
ECB President, Christine LagardeHe had already predicted that net borrowings would end in May, which would be the beginning of the first increase in the money price from 0% in six years since April 2011. Another spike in September, when the negative rates that banks have experienced for six years in the eurozone will disappear.
The debate is no longer whether to raise interest rates, but over what. measure to make. Markets are pointing to a quarter point in July and a half point in September, but nothing is certain.