The ECB will not rest until inflation returns to 2%. This was confirmed by the head of the European Central Bank, Christine Lagarde. Speaking in the European Parliament, Eurotower number one made its tough stance to bring the increase in the cost of living in the Eurozone to exactly the 2% of the ECB’s target as soon as possible. The description of the former director of the International Monetary Fund foresees further increases in interest rates and cuts in purchase programs, with net results on mortgages and loans.
Inflation started to fall
But Frankfurt’s number one acknowledged that inflation was starting to fall. “The fall in December is mainly due to the sharp fall in energy prices,” Lagarde said. said. “At the same time, the previous rise in energy prices and other input costs still affects consumer prices. Overall, price pressures are strong and inflation is still high: excluding energy and food, it remained at 5.2% in January.” Room.
New rate increases
This is where the central bank’s disagreement stems from: “At our last meeting on February 2, we decided to raise the ECB’s reference interest rates by 50 basis points and we plan to increase it further”. In the key part of his speech, he said, “In light of the underlying inflationary pressures, we plan to raise interest rates another 50 basis points at our next meeting in March, and then we will evaluate the course of our monetary policy from now on.” .
“Reduce Demand”
Lagarde’s recipe is based on one of the most basic rules of monetary policy. “Keeping interest rates at restraining levels will curb demand and reduce inflation over time, while also protecting against the risk of a persistent upward shift in inflation expectations,” he said. However, the ECB chairman refrained from making long-term plans and said that “our future decisions on official rates will continue to be data-driven.” ‘ and a ‘meeting meeting’ will be held.
Reduce purchases
The former French economy minister then returned to the issue of securities purchases, which are invaluable above all for the most indebted economies such as Italy. “At our February meeting, we decided on ways to reduce the size of Eurosystem’s balance sheet as part of the acquisition programs,” he recalled. “As reported in December,” the “portfolio” of these programs will decline at a measured and predictable pace, with an average of €15 billion per month from the beginning of March to the end of June 2023, and the next pace to be determined. overtime.”
Source: Today IT
Karen Clayton is a seasoned journalist and author at The Nation Update, with a focus on world news and current events. She has a background in international relations, which gives her a deep understanding of the political, economic and social factors that shape the global landscape. She writes about a wide range of topics, including conflicts, political upheavals, and economic trends, as well as humanitarian crisis and human rights issues.
