The European Central Bank (ECB) has planted face pressure and the rest of the world's large central banks and has decided to maintain its roadmap despite the increase in inflation. That is, it has maintained its commitment to the gradual withdrawal of stimuli. However, the highlight of the meeting held in Frankfurt this Thursday has not been the continuity of the status quo, but what the President, Christine Lagarde, has said in her speech. And what she has not said.
LAGARDE has rejected rule out an interest rate rise this year, so markets interpret a change of tone in their position and have armed arguments to defend that the upward will reach 2022, and not in 2023 as the entity itself said in December.
As much as the press has tried to clarify the ambiguity of the President, she has resisted confirming that the rise in rates can be ahead at the end of this exercise and has placed the month of March to analyze any modification by the entity: " The situation has changed ", there are rising risks for prices and in March" we will have more economic data to decide. However, Lagarde has reiterated that the rise will never occur "before finishing our net bond shopping programs."
But in addition to his speech, Lagarde has shown the concern within the Governing Council before the price escalation that has led to inflation from January to maximum of 5.1%. "Compared to December, the risks of our inflation prospects are inclined upwards," the French leader has assured. The tone of it and the message of it reflected the concern for the increase in prices, a concern that is "unanimous" in the Government Nice of the ECB.
The entity is aware of pricing pressure, but still without relying on the recovery of eurozone economies and does not want a precipitated withdrawal to put them at risk. In addition, it considers that "at least 50%" of inflation is due to the increase in energy prices (oil, gas and electricity). "Do you think that if the ECB reduced debt purchases and upload the types that would change?" He has responded to the journalist who had previously asked him for the motive of ECB immobility. "No," she has answered.
So, for the moment, the ECB maintains everything as agreed after the December meeting. That is, the reference interest rates for their refinancing operations continue at 0%; The fee ease of deposit, in -0.50%, and the loan ease, at 0.25%. In addition, the ECB will end the emergency purchase program against pandemic (PEPP) in March 2022 and in parallel, it will increase the purchases of assets under its standard asset purchase program (APP, for its acronym in English ).
The markets have not been too surprised at what they consider a turn towards a more Hawkish posture by the ECB. In Spain, the Ibex 35, which was slightly in losses, turned behind the LAGARDE press conference, but it has ended up closing with a decrease of 0.27%, while the euro has skyrocketed until highs of the latter Two weeks against the dollar.
Investors and markets look at the appointment next March. "If the inflation projections, which are already reasonably promising, are reviewed upwards by 2023 and 2024, the ECB is likely to contemplate a rather accelerated exit path. The market is fully assessing a first rise in 10 basis points types in July, which implies the end of net asset purchases already in April, "says Konstantin Vit, Pimco manager's portfolio manager." Yes, on the other hand, medium-term inflation is in line with current projections. Or below them, the ECB will probably be on autopilot for most of the year, "he adds.
"The maximum responsible for the Monetary Central Bank of Europe again avoided compromising too much. Instead, Lagarde emphasized the dependence on data and stressed the importance of the March meeting. This can be interpreted as an indication that, in view Of still elevated inflation rates, the debate on a prompt exit from the ultra-expansive monetary policy is also charging boost in the euro zone. Therefore, a first rise in interest rates before the end of the year seems a pretty realistic scenario " , says Ulrike Kastens, European economist for DWS.
Other analysts such as Pedro del Pozo, Director of Financial Investments in Mutuality of Advocacy, do not rule out a tightening of monetary policy without reaching a rise in rates in this year. "While any additional measure of monetary normalization is possible, such as acting in deposit facilities, it is unlikely to see a rise of types before 2023, especially if inflation moderates something in the second section of the year. On the other hand , the European economy is not registering salary pressures equivalent to British or Americans. In that sense, we understand that from the ECB it does not want to endanger a post-Covid recovery, even incipient, for the sake of price containment, whenever we start With gradual inflation reduction in the coming months. "Date Of Update: 05 February 2022, 04:31