Eurozone falls while interest rates rise European Central Bank (ECB) officials continue to suggest that the economy has entered a recession. His statement follows the latest rate hike announced by the Fed last week and revised forecasts pointing to higher than previously expected inflation in Europe.
“We have no choice but to raise interest rates,” he admits ECB’s Luis de Guindos.
The Eurozone is heading into recession. Acknowledging this, ECB Vice President Luis de Guindos argues: Regulators should continue to raise interest rates to keep inflation in check. “We have no choice but to act,” the chief executive told his Le Monde, as his medium-term price stability target is likely to keep inflation at 2%.
On Thursday December 15th, the ECB raised the deposit facility rate by 50 basis points to 2%. In an interview, published on the same day by the French daily newspaper and bank on his December 22nd, de Guindos said that the European economy will likely be in negative territory in his fourth quarter of 2022. It is in”. With GDP
the leading indicators we have are not good. The Eurozone is therefore projected to slip into a mild recession in the fourth quarter of this year and he in the first quarter of 2023, with GDP he forecast to shrink by 0.1%.
Growth forecasts released in December are similar to his September projections, but forecasts for inflation have changed significantly, says Spain’s former economy minister . Inflation expectations have been revised upwards significantly, from 5.5% to 6.3% in 2023, and he has been raised from 2.3% to 3.4% in 2024, de Guindos detailed.
At a press conference after last week’s rate hike, ECB President Christine Lagarde announced several more rate hikes next year. Asked if it would frustrate some governments, her deputy emphasized that inflation is currently a major problem in European countries. While admitting to increasing costs, Luis de Guindos argued that the ECB must stick to its mandate. The current inflation rate he is 10% and the banker is convinced:
His comments came after the US Federal Reserve raised its federal funds rate by 50 basis points in his mid-December. The 0.5 percentage point rise followed his fourth consecutive rate hike of 75 basis points.
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