Inflation, the ECB could “stop” the rate hike in September
The ECB could, in September, decide to avoid a new rate hike. This because core inflation (which excludes energy and groceries) would appear to have reached its peak. It is an indicator carefully monitored by the Central Bank. In Europe, the consumer price index (CPI) has slowed down slightly since July, 5.5% to 5.3%.
Eurostat also confirms the trend (from 6.8% to 6.6%). Eurobank, for its part, confirmed the same indications of a slowdown. One of the most authoritative voices of the ECB, the Italian Fabio Panetta, considered a “dove”, he said the “disinflation” process is already underway. “In particular – she said – the prospects for price increases by economic operators have been declining since March”.
Panetta however is convinced, unlike many other European colleagues, that core inflation is not an “advanced” indicator, but a “late” measure of what is happening. Panetta also proposed a change in Eurobanca’s approach. “the ECB – Panetta argued – should move from a “level” policy to a “persistent” one. In other words, we should move from a strategy consisting of raising interest rates to one based on keeping them at high levels for the time necessary to appease inflation”.
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