ECB plans long-term rate hike
2022.11.22 11:37
ECB plans long-term rate hike
Budrigannews.com – The head of Germany’s Ifo economic institute told Reuters on Tuesday that the European Central Bank will unquestionably raise interest rates significantly, but how much it ultimately does will depend on how the economy develops.
Clemens Fuest stated, “The ECB still has quite a long way to go.”That simply reflects the fact that it began late.”
Fuest asserted that the only thing the ECB has done thus far is normalize monetary policy, and given the fact that inflation was at an all-time high and the economic situation was not as bad as anticipated, it was necessary to apply the brakes.
The European Central Bank (ECB) has increased interest rates by 200 basis points in just three months, despite the fact that the rate of inflation is now in the double digits.
Fuest expressed optimism regarding the prospects for Germany’s economy, which is Europe’s largest and could possibly experience a mild recession if there is no gas shortage this winter.
Fuest said, “We also see that industry is coping surprisingly well – at least in the short term – with the energy shortage and the high energy costs,” and he added that the economy was proving to be more robust than many people had anticipated.
Fuest added that Germany’s long-term deindustrialization should be a major concern, particularly for energy-intensive businesses, as it loses out to more appealing locations.
He added that a lack of skilled workers and protectionism would also become increasingly important factors.
