Christine lagarde Jerome powell
Lagarde: “Acting too fast, weak recovery and many jobs at risk”
Sitting down again for the European stock exchangesin the wake of the decline accused by Wall Street with the Nasdaq index losing 2.1%. Investors fear that the Fed may proceed to a tighter-than-expected monetary policy tightening, after yesterday it emerged that theinflation from January in States she pushed 7.5%, the highest since 1982.
James Bullardpresident of the Federal Reserve of St. Louis and member with voting rights of Fomcsaid not only to be in favor of an interest rate hike of 50 basis points in Marchbut of a whole percentage point by early Julyin response to the trend in the price index.
Such a move by the US institution would likely result in one reaction also by the ECB. So Piazza Affari opened with a decrease of 1.3%, but then reduced the damage to 0.8%. And the spread goes back to 159.5 points.
But the president of the ECB Christine Lagarde that for days, after the last board of directors on February 3, has been trying to curb market expectations on interest rates in the Eurozone has returned to reiterate its position. “Raising the cost of money now would not cool the euro zone’s record inflation and would only have the effect of damaging the economy,” explained the Eurotower head in an interview with the German broadcaster. Redaktionsnetzwerk Deutschland (Rnd).
Lagarde sent bond markets are in free fall last week, opening the door to the first rate hike by the ECB in over a decade in light of price pressure that shows no sign of abating.
With money markets now pricing in an ECB deposit rate increase of 50 basis points by December, Lagarde warned that a rise in the cost of money it would not be able to counteract high oil prices and supply problems which caused inflation to soar.
“This would not solve any of the current problems,” Lagarde explained. “In reverse: if we act too quickly now, our economies will recover it could be considerably weaker And many jobs would be at risk“.
The central banker reiterated that the Eurotower will withdraw its aggressive stimulus policy and negative interest rates gradually, and only when conditions permit. “Now we can adjust – calmly and one step at a time – our monetary policy tools,” she said. “And when economic data allows us to do it, we will.”
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