2023-09-14 18:58:35
A final increase for the road? Thursday, September 14, the European Central Bank increased its interest rate by 0.25 points, to 4% for its deposit rate, which is the benchmark. This is the highest level ever reached since the creation of the single currency. It is also the tenth increase in a row, thus constituting the fastest monetary tightening in the history of the euro zone. In total, the deposit rate increased from −0.5% in June 2022 to 4%.
But at the same time, the monetary institution indicates that a ceiling has now been reached. “The Governing Council considers that ECB interest rates have reached levels which, [s’ils sont] maintained long enough, will make a substantial contribution to bringing inflation quickly back to target [de 2 %]. » Clearly, behind this jargonous central banker language, the ECB is entering a new phase of stabilizing interest rates.
“We believe this marks a peak in interest rates for the ECB and that it will keep them at these levels until the second half of 2024”, estimates Charles Seville, economist at the Fitch rating agency. Christine Lagarde, the president of the institution, wants to be more cautious than that, to avoid insulting the future: “We are not saying that we have reached a peak. But from now on, we will focus more on the duration [pendant laquelle les taux vont rester à ce niveau]. »
Stagnation, the desired objective
The twenty-six members of the board of governors (one per euro country and six on the executive board) began their discussions on Wednesday with real uncertainty. For the first time since the price surge, a rise in interest rates was no longer a given.
On the one hand, inflation is falling. “We were at 10.6% [en octobre 2022]recalls Mme Lagarde. We are now at 5.3%. Is it satisfactory? No. But this is a step backwards. » On the other hand, the economy is now in virtual stagnation. “We are going through five quarters of very, very sluggish growth », poursuit Mme The guard. The eurozone is on the verge of recession and Germany, the most affected country, has clearly entered it. According to ECB forecasts, published on Thursday, growth should only be 0.7% this year. The institution also revised downwards its forecast for next year: instead of growth of 1.5% in 2024, it is now counting on 1%.
From the ECB’s point of view, this stagnation was the desired objective. The increase in interest rates seeks to deliberately slow down the economy and all indicators show that this is what is happening: borrowing by households is experiencing its sharpest decline since the creation of the euro zone ; almost everywhere, real estate markets are in decline; banks have tightened their lending criteria…
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