The main interest in the press conference that ECB President Christine Lagarde will hold soon will be to know whether the Eurozone central bank maintains its focus on controlling core inflation.
The European Central Bank (ECB) has announced a new rate hike from a quarter of a point to 4%. This raises the price of money in the euro area to its highest level since the introduction of the euro, given that core inflation remains high.
In this way, the script established by the market consensus is fulfilled so that the reference rate for its refinancing operations will reach 4%, while the deposit rate will reach 3.50% and that of the loan facility will reach 4.25%.
With this eighth consecutive increase in the money price, which has reached its highest level in almost 15 years, the ECB continues to tighten its monetary policy after the United States Federal Reserve decided yesterday to pause the cycle of increases, after ten consecutive increases since March 2022.
With the announced quarter-point increase, in line with the increase approved in May, the ‘guardian of the euro’ has increased the monetary price by 400 basis points during the current cycle of increases, which started in July last year.
The ECB’s market-expected decision comes after eurozone year-on-year inflation slowed to 6.1% in May, nine-tenths lower than the price increase recorded in April and the lowest level since February 2022. Excluding the impact of energy and food, alcohol and tobacco, the underlying rate fell from 5.6% last month to 5.3%.
Similarly, a week ago, Eurostat downgraded its data on euro area gross domestic product (GDP) growth, which eventually registered a contraction of 0.1% in the first quarter of 2023, signaling the start of a recession . economy of the region, after the drop in activity also by 0.1% in the fourth quarter of 2023.
It’s about the first recorded recession in the eurozone economy as GDP contracted sequentially in the first and second quarters of 2020 due to the impact of the covid-19 pandemic and the restrictions put in place.
In this way, the main importance of the press conference that will subsequently be offered by the President of the ECB, Christine Lagardewill it be to know whether the Eurozone central bank remains focused on containing underlying inflation and possible second-round effects or whether the weakening of the economy and the slowdown in energy price rises, together with financial tensions allow the entity to pause in the cycle of increases.
Source: EITB
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
