ECB member Holtzmann fragmentes inflation ahead of July rate hikes

The ECB is heading for a key meeting in July, interest rates are expected to rise, and investors are waiting for details on new fragmentation tools.

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Members of European Central Bank He told CNBC on Wednesday that there are many runways to raise interest rates following the two rate hikes scheduled for July and September.

At an important meeting next month, all eyes are on the ECB.Eurozone central banks have announced they will raise interest rates for the first time in 11 years, but investors are more concerned about whether they are presidents or not. Christine LagardeTeam will be able to further tighten monetary policy in the medium term.

The ECB says another rate hike will take place in September, but given that Block’s economic outlook is bleak, questions remain now and for the rest of the year. Raising interest rates could further slow economic growth.

“We need to assess where economic development is heading and where inflation is. Then, at the levels of 0.25 and 0.5, there is plenty of room to speed up to what we think. I think it’s reasonable. “Masu,” said Roberto Holtzmann, who is also the president. The Austrian central bank told CNBC about the period after September.

At this point, central banks need to somehow manage record levels of inflation and a deteriorating economic outlook. The ECB forecasts Eurozone growth of 2.8% this year in June, but there is growing concern that this will not happen as the war in Ukraine puts ongoing economic pressure on the block. ..

ECB Chief Economist Philip Lane Earlier, the ECB emphasized the need to manage two major risks.

“On the one hand, it could help keep inflation longer than expected, and on the other hand, there is a risk that the economy will slow down and inflationary pressures will fall,” he told CNBC on Tuesday.

However, according to Austria’s Holtzmann, “there are signs that inflation could peak towards the fall.”

ECB forecasts show that consumer price inflation will slow from this year to the next, with headline inflation rising from 6.8% to 3.5% in 2023. However, as the war in Ukraine prolongs, these estimates carry a lot of uncertainty. The energy crisis is accelerating and food shortages are pushing up living costs.

Investors are also beginning to worry about the risk of fragmentation in the euro area.

Earlier this month, the central bank held an emergency meeting to address the so-called surge in borrowing costs in neighboring European countries. The ECB said it would develop new tools to address these risks, but the market was wondering when and how far the tools would be implemented.

“We aim to design what is called a backstop to help normalize,” Central Bank member Mario Centeno told CNBC at the ECB Forum in Sintra, Portugal. I am.

Since the ECB’s intention to raise interest rates in July and September and a policy shift, investors have questioned whether large debtors such as Italy and Greece will cause problems with borrowing costs. The ECB’s future fragmentation tools aim to address these issues by generally informing investors that they do not have to worry about these debt piles.

Centeno said the tool is “certainly preventative” and does not show “actual fragmentation in the market.”

Constantine XI Palaiodto, Governor of the Central Bank of Cyprus, He also attended CNBC on Wednesday, saying that “there is no final decision” on the fragmentation tool.

The ECB’s next meeting is July 21st. However, Herodotou has defined the purpose of this new policy tool in preparation.

“If there is unjust fragmentation, it is not based on economic fundamentals, but it must be large and strong enough to be effective, but at the same time moral hazard within its design. You need to have the ability to avoid the problem of. “He said.

ECB member Holtzmann fragmentes inflation ahead of July rate hikes

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