There is no good news since World Economic Forum of Davos: in her speech yesterday, the President of the ECB Christine Lagarde, in fact, he once again took on the role of “falco” announcing that the European Central Bank is ready to go straight on rate hikes of interest with the aim of reporting inflation at 2%.
Lagarde, still “falcon”
“In the euro area – said Lagarde – it is too high and we are determined to bring it back to 2% in a timely manner with all the necessary measures”. Inflation remains the “primary objective of the ECB” which will hold “the straight bar until we’ve gotten into restrictive territory long enough to quickly bring inflation back to 2%”.
“Economic news has become “much more positive” and the economy will probably only experience a “small contraction” in the eurozone, explains Lagarde again, also specifying that the 2023 “will not be brilliant but it will still be much better than feared.” Furthermore, he underlines, “the labor market has never been as lively as it is now” and this happens “in a homogeneous way throughout the euro area”.
Rates, keep going up
Meanwhile, the minutes of the Council of December show that the increase of 50 basis points operated on that occasion was the subject of intense discussion, which in fact arrived at the end of a real negotiation. In which the counterpart of this increase – more contained than the previous two, by 75 basis points – was to clearly tell the markets that the increases will still continue in a “significant” and at a steady pace.
What emerges from the minutes
“initially, a large number of constituents expressed a preference for raising rates by 75 basis points, given that inflation was clearly expected to be too high – it reads – and that the prevailing market expectations on financial conditions were that they were inconsistent with a return to the ECB’s target of 2%”. According to these central bankers raise rates to a lesser extent “would have sent the wrong message.”
At the same time, “some members of the board have, however, expressed their willingness to agree on an increase from 50 basis points if a majority supported the proposal (by chief economist Philip) Lane to strengthen the Council’s communication with the indication that it would continue to raise rates significantly a steady pace”.
Thunberg on the attack
In Davos “the people who are most fueling the destruction of the planet” gather, and it is “absurd” to listen to them. Greta Thunberg returns to the attack of the World Economic Forum. Released a few days ago by the German police for protests against the expansion of coal mining in Lutzerath, the twenty-year-old Swedish activist barricaded herself a few steps away from the premises where Davos’s political, financial and corporate elite meet, launching a clear message: “Here the people who they destroy the planet”.
