With an inflation rate of 5.4 percent, Austria lags behind in the eurozone. Overall, inflationary pressures have eased significantly, as ECB Vice President Luis de Guindos has now explained – but it is still too early to declare victory in the fight against inflation.
Inflation in the euro area fell to 2.4 percent in November, after 2.9 percent in October. Despite the sharp fall in inflation pressures, there is still no reason to make everything clear, according to ECB Vice President Luis de Guindos.
Inflation target for Europe within reach
The latest inflation data was “good news” and a “positive surprise”, the Spaniard said on Monday. This means that the ECB’s inflation target of 2.00 percent is increasingly within reach. According to a flash estimate from Statistics Austria, there was no real positive trend in Austria in November; inflation remained at a strong level at 5.4 percent.
“This means that the trend of declining inflation rates that we have observed since the beginning of the year has been interrupted for the time being. “This is mainly due to the fact that household energy prices have a significantly less dampening effect on headline inflation than in previous months,” explains Tobias Thomas, head of Austrian statistics.
Inflation remains high compared to the EU
Austria remains one of the countries in the eurozone with relatively high inflation. By comparison, inflation in Germany fell to 3.2 percent in November from 3.8 percent in October – which is the lowest value since June 2021, when it was 2.4 percent in our neighboring country.
What happens next with the main interest rate?
The financial market expects a first interest rate cut in April next year. The Euro Central Bank had raised interest rates ten times in a row since the summer of 2022 in the fight against a huge price rise. At their meeting in October, the monetary authorities decided to temporarily halt their interest rate hikes due to fears of a recession and the already sharp fall in price pressures.
And before the last interest rate meeting of this year, on December 14, experts expect them to stand still again. The deposit interest rate that banks receive from the central bank for parking excess funds, which is the trend in the financial market, now stands at 4.00 percent. This is the highest level since the start of the monetary union in 1999.
Source: Krone
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.
