Published on : 27/06/2022 – 06:22
Sintra (Portugal) (AFP) – The European Central Bank opens its annual forum in southern Portugal on Monday evening, where central bankers and economists are to discuss the best way to deal with the return of inflation, boosted by the war in Ukraine.
The ECB forum meets in the presence of nearly 200 participants in Sintra, west of Lisbon, in a luxury hotel, following two years in virtual format due to the pandemic.
ECB President Christine Lagarde will return to Sintra following speaking at the first edition of the institute’s forum in 2014, when she was managing director of the International Monetary Fund.
Alongside him in Sintra will be Federal Reserve Chairman Jerome Powell and Bank of England Governor Andrew Bailey.
They will be joined by the Director General of the Bank for International Settlements Agustín Carstens, the four officials being gathered to discuss Wednesday at the end of the seminar.
Ms. Lagarde’s speech scheduled for Tuesday morning will be closely scrutinized by the markets, as the ECB prepares in July, in the face of inflation, to raise its interest rates for the first time in eleven years.
This prospect has resurrected the risk of a debt crisis in the euro zone, with growing interest rate differentials demanded of the States of Northern and Southern Europe to borrow and finance their deficits.
The ECB has recently had to do its utmost to reassure investors by announcing preparations for a new “anti-fragmentation instrument” to smooth out the notorious spreads, the rate differentials between countries benefiting from good borrowing conditions and the others . Any new details given in this regard will be closely scrutinized in Portugal.
The tone is likely to be serious. According to European sources, Christine Lagarde told EU heads of state and government on Friday, meeting at a summit in Brussels, that the war was tangibly affecting the economy of the euro zone.
Activity is suffering from the rise in the prices of gas and imported raw materials, fueling inflation that is set to last.
The persistent bottlenecks and the ambient uncertainty also weigh down the activity, she detailed according to the same sources.
© 2022 AFP
