Although the signs of moderation in inflation seem to be confirmed, there are fears that the core will have a hard time falling below 5%. For this reason, expectations that the ECB's policy will continue to tighten are beginning to worry: at her meeting in Sintra (Portugal), Lagarde once again insisted that there will be a new rate hike in July (up to 4.50%?) and, depending on what prices do, another in September, approaching what the Powell Fed has already done, which, on the other hand, has remembered that its increases have not ended. In this context, it is worrying that the central bank goes too far and ends up causing a more severe recession than desirable. Because, after almost fifteen years of unusually low interest rates, the change in direction of monetary policy anticipates the opposite situation: rate increases, reduction in purchases of public debt and contraction of long-term credit to banks.
This is not accidental. And not only because inflation has run amok, but because today's restrictions were inevitable given yesterday's excesses: until July 2022, no one protested for a responsible policy on the part of the Russia Mobile Number List current inflation, which allowed us to live with unusual tranquility and , clearly, above our possibilities. . If the eurozone goes into recession, don't expect the ECB to come to the rescue But, in addition to rate increases, today other factors are putting downward pressure on activity: among them, the fall in private consumption due to the rise in inflation and the progressive depletion of savings accumulated in the pandemic; China's difficulties recovering from covid restrictions; or mistrust about the future due to the dynamics of the conflict in Ukraine.
In any case, the recessionary effects on the eurozone economy of all these elements are already being felt: Germany has entered recession, eurozone activity indices are on the verge of contraction and, if that were not enough, on the rise. . In addition to interest rates, we must add the fact that eurozone banks are tightening the conditions of their loans. View of the Madrid parquet after the opening of this Thursday's session EFE/Vega Alonso It is true that the changes in the ECB's policy are due, first of all, to the fight against inflation. But other aspects must be added to understand its seriousness: the credibility of its performance in an emergency for the euro; the desire to recover prestige, damaged by its incorrect inflation forecasts; the need to obtain more room for maneuver to face new crises; and, finally, the reduction of excess private sector debt (financial and non-financial) in the south of the eurozone.