Christine LagardePresident of the President BCELaunched Alarm: Maintaining this goal will be extremely difficultInflation Addition 2 % In the current economic context.
I Duties European goods and winds of winds on one side through Donald Trump Straight Not yet inactive, which will push EU nations into maximum investment in defense, which can affect inflation. This will have an impact on ECB’s financial policies.
Christine Lagard on inflation
US duties related to European imports are expected, they may have a double effect: to one side Increase in prices.On the other hand Reduce Usually Exports EU, with potential deflationary effects.
Lagarde has pointed out that, yes, ECB will continue to commit permanent commitment to stability in prices, and is trying to adopt new important issues. But nevertheless, the euro zone, which strictly relies on trade and energy imports, is especially suffering from a new economic shock.
In this scenario, the ECB leaders described as “extraordinary high” of “economic and geographical political uncertainty” cannot ensure that inflation will always be 2 %. So in his intervention in the 25th edition of the conference, Christine Lagarde said ECB and its viewer In Frankfurt
Therefore, the invitations to the central bankers who will have to “showcase their trends and their tools in adapting to the apparatus of changes in the situation, as well as intellectual curiosity to question stable principles and traditional wisdom”.
There are two unidentified persons on the horizon: one is related to the possibility that a piece of exchange can destabilize the market. Then there is an energy node along the euro area, which depends firmly on energy imports: geographical political tension exchange rates and energy prices and raw materials to determine more volatility.
Because inflation on 2 %
The major financial crisis that led to the outbreak of war in Ukraine, which had a significant impact on the energy market, increased the rates to counter the growing inflation. It has become more expensive to take money on the loan
And ‘Inflation on 2 % Is decided Maximum From Central Banks. Inflation is the value that indicates the power to buy currency. Inflation reduces consumption and makes society poor. Less than 2 % of (defense) inflation is forced to postpone families and companies to postpone the cost and investment in hopes of spending less. 2 % fixed inflation is considered an ideal balance point.
What happens if inflation increases
If the international uncertainty was meant to sore inflation Increase in rates.
Will have a quick effect on mortgage: i The variable rate mortgageDepending on Uribor, they will see the increase in their installments. The default rate will be anchored on the conditions set at the time of the mortgage sign, while the less beneficial conditions will be seen on the fixed mortgage of the new condition.
As if Loan, Families They will find less beneficial to buy in installments as rates will make funding more expensive. Companies In view of the highest costs in credit access, they will slow down their investment.
But more inflation will immediately translate into the loss of purchase power SalaryFor which automated and quick adjustments are not evaluated, and consequently the state VAT purchase and revenue.
