DECRYPTION – The European Central Bank faces a dilemma between controlling inflation and an increasingly shaky European economy.
Twenty-five basis points or fifty? Which way will the coin fall on Thursday? This is the question that is bothering monetary policy enthusiasts at the moment. It concerns the extent of the reduction in the main key rate, the deposit rate, which will be announced by the European Central Bank (ECB) on Thursday. In the wake of the war in Ukraine and the explosion of inflation, the ECB very quickly increased its rates in order to curb price increases.
Since June, as inflation calmed, it has reversed course. The deposit rate, which peaked at 4% in the spring, has been set at 3.25% since October. The whole debate now focuses on the speed at which the slope must be lowered. The pace chosen will have significant consequences on the economy. It remains to…
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