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Inflation is falling, but it is too early to give clear information about prices. European Central Bank (ECB) President Christine Lagarde (67) left the interest rate at 4.5 percent. Lagarde follows the US Federal Reserve and the Swiss National Bank SNB in not making any adjustments to interest rates.
High interest rates make loans more expensive. This slows demand and offsets high inflation rates. But more expensive loans also put pressure on the economy because companies have to pay more for loan-financed investments. Monetary authorities are currently refraining from raising or lowering interest rates because the economy is already fragile and inflation has not yet been declared defeated.
Many economists expect the euro’s monetary authorities to cut interest rates next year. However, ECB President Lagarde recently warned against declaring victory against inflation. On the contrary, it is necessary to be cautious until inflation returns to the medium-term target of 2 percent. Bundesbank President Joachim Nagel (57) warned: “It would be premature to cut major interest rates any time soon or to speculate about such steps.”
The ECB has tried to combat rising inflation this year with a rapid series of interest rate hikes. The central bank left the interest rate unchanged in December for the second consecutive year.
Source :Blick
I’m Tim David and I work as an author for 24 Instant News, covering the Market section. With a Bachelor’s Degree in Journalism, my mission is to provide accurate, timely and insightful news coverage that helps our readers stay informed about the latest trends in the market. My writing style is focused on making complex economic topics easy to understand for everyone.
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