The The speed at which the ECB has increased its rates represents the greatest tightening in its monetary policy of his story.
The The market anticipates that the European entity will increase its rates in December by 50 points, taking them to 2%, according to news agencies Bloomberg and DPA. Thusanother rise of 75 points would be avoided due to the fear of a setback in the economy of the 19 countries that use the euro during the next boreal winter.
In that sense, In addition to anticipating new increases in the cost of money, Lagarde warned that the “risk of a recession” has increased and that, even if this happened, it would not be enough to calm prices.
That is why, for the president of the ECB, monetary policy is vital to anchor inflationary expectations. “We expect to continue to increase rates. Ultimately, we will increase them to levels that allow inflation to be brought down to our medium-term goals.“Lagarde said in a speech in Frankfurt, Germany.
As noted this week the vice president of the ECB, Luis de Guindos, inflation in the Eurozone will remain high in the coming months and -in the same line as Lagarde- pointed out that lhe economic slowdown, driven by the energy crisis, will not lower prices on its own.
“Inflation in the Eurozone is too high. Historical experience suggests that a recession is unlikely to bring inflation down significantlyat least in the short term,” said Lagarde today, who, in turn, pointed out that in December the bank will put more pressure on the reduction in its balance sheet that it will carry out during the next year.
Facing the long term, the French, former head of the International Monetary Fund (IMF), stated that fiscal policy will be key to stimulating or not growth, and that governments will have to choose between raising taxes or cutting public investment.
“If they opt for the latter method, as they did after the great financial crisis, there is a risk that supply will not recover and growth constraints will continue to constrain“said the ECB president.
The gross domestic product (GDP) of the euro area slowed down its rate of expansion between July and September to 0.2% from the 0.8% observed in the second quarter of the yearaccording to the estimate published by the Community statistical office, Eurostat.
In addition, various entities warned that the eurozone It will go into recession towards the fourth quarter of the year..
Source: Ambito
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