The usual Germany, which never loses the habit of being a killjoy. Right on the day of Jackson Hole, the symposium of central bankers organized by the Federal Reserve. Not that there was any particular doubt that Jerome Powell and Christine Lagarde, president of the European Central Bank, decisively pulled the handbrake, but we certainly heard the German hawks (Germany, for the record, is in a recession) furious at the fees. always has a certain effect. And so, here is Bundesbank number one Joachim Nagel delaying the end of the ECB’s monetary tightening by postponing rate decisions to September.
“I think it’s still too early to think about a break” with regard to rate hikes, Nagel said in an interview with Bloomberg TV. According to Nagel, who is also a member of the ECB board, most of the effects of the measures adopted by Frankfurt in the last twelve months will be visible over the next year, even though he recalled that the inflation rate is still around 5%, “ therefore it is too high”, since the target is 2%.
“There is a way forward, but we have to wait for the September data”, said the governor of Buba, adding that although the base rate could fall, it could take more time for the base rate to also decrease. On the other hand, the president of the Bundesbank guaranteed that he did not see a “hard landing” scenario for Germany and was “quite optimistic” about the possibility of a soft landing, on the contrary. In short, the Germans continue to play the crooks, perhaps ignoring the fact that inflation in the eurozone has been on the wane for months. And rejecting the charge that we are the sick people of Europe. It is a pity that the numbers belie all this, given that Italy, at least this year, will grow at a decidedly faster pace than Berlin. For next year though, the game is all up for grabs. Looking ahead to the summit in Wyoming, the dilemma for the Fed and the ECB is always the same: how far are the two central banks willing to push their economies into recession in order to reach the 2% inflation target? Although inflation is already significantly lower in the United States (3% in July) than in the euro area (5.3%), in both cases the last kilometer to reach the desired target is more complex and the commitment to achieve could result in recession in both blocs. In fact, compared to previous meetings where banks leaked their future intentions, this time it is still not clear whether in September there will be talk of a pause or an increase for both central banks.
Source: IL Tempo
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
