Friday, December 09, 2022

The European Central Bank did not give a clear date for the rate hike

The head of the European Central Bank reiterated on Thursday that the bank would raise interest rates “sometime after” ending its pandemic stimulus efforts later this year, as the United States, the United Kingdom and other countries also took a gradual Will stick to the path. To counter rising consumer prices.

People in the 19 countries that use the euro currency have seen the cost of everything from food to fuel rise as inflation grew at an annual rate of 7.5%. Last month, the highest since figures began in 1997.

Driven by energy prices that have risen ever since Russia’s invasion of UkraineRecord inflation has taken notice when the European Central Bank will take more drastic measures to control excessive price hikes for consumers.

The bank said recent economic data reaffirmed hopes of ending its pandemic stimulus efforts later this year And that the exact timing will depend on the economic situation.

“We are sticking to our sequence,” said the bank’s president, Christine Lagarde, who opened the door for interest rate hikes earlier this year, with any rate hikes following the end of bond purchases in the economy during COVID. To support- 19 Pandemic. That could mean “anywhere between a week and several months,” Lagarde said, before the bank can decide on “an interest rate hike and subsequent hike.”

Speaking at a video news conference after testing positive for COVID-19 last week, Lagarde stressed the war on uncertainty and the bank’s willingness to remain flexible in adjusting its policies, adding that the pandemic coincides with stimulus purchases. Experience showed “flexibility served us well.”

He said inflation “will remain high in the near term and then moderate to some extent” amid uncertainty from the war. While higher energy prices were fueling inflation, weak growth could ease price pressures in the economy, Lagarde said.

Carsten Brzewski, global head of macro at ING Bank, said his comments suggest that bond purchases will end in July and interest rates will rise for the first time in September. He called it “generalization at a snail’s pace” after the large doses of stimulus applied during the depths of the epidemic.

The war has sent inflation to an unexpectedly high level. Oil and gas prices rising on fears of a cutoff from RussiaWhich is the world’s largest oil exporter, and as the pandemic recovers, demand for the fuel grows.

As inflation rises around the world, the US Federal Reserve increased its benchmark short-term rate Last month and indicated that it will continue to grow it rapidly this year. The Bank of England has raised its prime interest rate three times since December.

Lagarde said that the European and American economies are not comparable. One reason is that “the euro area is going to be more exposed and will suffer greater consequences as a result of a war by Russia against Ukraine… comparing our respective monetary policies is like apples and oranges.”

Economists say the majority of US inflation is domestic – a side effect of massive federal stimulus and support spending during the pandemic. Europe’s inflation, on the other hand, is largely driven by higher oil prices.which are generally out of reach of interest rate policy which is controlled by the central bank.

On top of that, high inflation and supply constraints are weighing on economic growth, leading to what some are calling “inflation.” A combination of slow growth and high inflation, the phenomenon has put central banks in a dilemma: the rate hikes needed to combat inflation could also hurt growth and jobs.

An emphasis on consumer purchasing power has helped narrow the voting gap by French presidential candidate Marine Le Pen, a far-right nationalist. Against centrist Emmanuel Macron in the campaign before the runoff on 24 April.

The ECB’s benchmark rates are at a record low: zero for lending to banks and minus 0.5% on deposits from banks, a penalty rate intended to induce them to lend money.

Nation World News is the fastest emerging news website covering all the latest news, world’s top stories, science news entertainment sports cricket’s latest discoveries, new technology gadgets, politics news, and more.

Latest News

Related Stories