ECB Will continue to raise interest rates-Budrigannews
2022.11.16 08:41
ECB Will continue to raise interest rates-Budrigannews
Budrigannews.com – The European Central Bank (ECB) still has several ways to strengthen its policy, but it needs to proceed and calculate carefully to increase the likelihood of a recession, European Central Bank policy official Hernandez de Kos said on Tuesday.
“Given the high inflation rate and the uncertainty in the economic outlook, the specific level at which interest rates must be reached to adjust to this target is uncertain because it depends entirely on the data and may change over time,” De Cos said of Madrid’s financial events.
The ECB has raised rates at the fastest pace on record, lifting them to 1.5% to a total of 200 basis points in just three months.Despite the rapid pace, markets still expect banks to further raise interest rates to curb sharp and widespread inflation.
De Kos said the inflation recovery has proved to be very sustained and will also expand, causing a rapid loss of purchasing power and worsening consumer confidence in the euro zone.
“Both households and businesses are facing a very uncertain environment due to the consequences of the war in Ukraine, especially due to the energy crisis,” De Kos said.
The governor of the Bank of Spain also said that the reduction of the euro zone balance sheet “must be very gradual and predictable.””
“Through the flexibility of the reinvestment of Peppe or the activation of TPI, if the reduction of the balance sheet reappears, it will be possible to reduce fragmentation if it proves legitimate and necessary,” the central bank said.
