In most European Union member states, inflation rates are slowly returning to normal. There is still a long way to an optimal economic situation. However, the situation forces the European Central Bank to temporarily increase interest rates.
Pierre Wusch, member of the Board of Directors of the National Bank of Belgium, claims that the optimistic attitude of many countries that have started to ease their monetary policies could have the opposite effect than intended.
According to the data, inflation could start to rise again after a series of declines. According to Bloomberg, the European Central Bank authorities, wanting to minimize this risk, prefer to counter it.
Currently, the complicated geopolitical situation, such as the conflict in the Middle East and the armed conflict in Ukraine, is also expected to drive inflation.
Forecast analysis
If you compare September’s data and forecasts with the last one, you will see the differences. Predicted inflation for December and subsequent months rose from 3.2 to 3.3 percent, and economists’ expectations for subsequent months are even more diverse.
The inflation target for September was 2.4%. Now it is no less than 3.2 percent, that is a big difference!
It’s about stopping a dangerous trend before it gets out of hand. Raising interest rates can also be read as a warning to state-owned banks. The situation of countries that have not adopted the euro, including Poland, should not change.
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Edy/Bloomberg
Source: wPolityce
Emma Matthew is a political analyst for “Social Bites”. With a keen understanding of the inner workings of government and a passion for politics, she provides insightful and informative coverage of the latest political developments.