The European Central Bank raises the price of money by another 0.5% and predicts more increases in 2023 to contain inflation
The European Central Bank (ECB) continues its strategy of interest rate hikes, but softens the tone somewhat. After inflation in the Eurozone gave a slight respite in November, the entity opted for a 0.5% rate hike, pushing the price of money to 2.5%, a level not seen since the collapse of Lehman Brothers in 2008. more was seen.
The entity led by France’s Christine Lagarde is lowering the pace in this way, after the two increases of 75 basis points it made in September and October. Lagarde warned last month that “there is still ground” on rate hikes. In any case, it will be decisions that will be taken “meeting by meeting” due to the current great uncertainty.
The ECB sees the “peak” of prices getting closer, which could come before the end of the year. All in all, he predicts inflation will decline “very gradually” throughout 2023, outlining a “challenging” outlook for European businesses and households. For example, the board of directors of the European bank points out that rates “will have to rise sharply” to ensure that inflation is reduced to around 2% in the medium term. However, with the normalization of monetary policy, there is a risk of the economy cooling down and it is increasingly likely that the European economy will enter a “technical recession” this winter.
The latest forecasts even predict an economic contraction due to the energy crisis and the slowdown in global activity. The ECB has downgraded its economic growth forecast and calculates that the eurozone will end this year with a 3.4% increase in GDP. It will slow to 0.5% in 2023 and then pick up again to 1.9% in 2024.
Source: La Verdad
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
