The prospects of reducing inflation are not yet present for the euro zone. According to Eurostat data, prices increased by 8.9% year-on-year in July. “Inflation prospects in the euro zone have not improved since the rise of July types,” says Isabel Schnabel, a member of the
Executive Board of the European Central Bank (ECB), from Reuters.
Another increase in key rates is expected
In fact, the monetary institution of the European Union had raised its reference rates by 0.5% at the end of July in an attempt to curb runaway inflation, for the first time in more than a decade. “We decided to upload the types 50 basic points because we were concerned about inflation perspectives,” explains Isabel Schnabel to the British press agency. The concerns we had in July have not been alleviated. […] I don’t think that perspective has fundamentally changed.”
Observations that reinforce a little more the probability of a second increase in key rates at the beginning of the school year, by 0.25% or even 0.5% again. And for a good reason, monetary markets have already adopted a position in favor of this hypothesis in recent weeks. Thus, they have reviewed their expectations of types of types, around 0.55% in September for a total increase of 1.18% at the end of exercise 2022.
Energy remains a major contributor to this inflation
Although inflation had already risen by 8.6% year-on-year in June, there is no reason to expect an inflection of the curve in the coming months, in particular the rebound in energy prices. The latter now represents 4.2 points of inflation within the euro zone. “I would not rule out that in the short term inflation will continue to rise,” said Isabel Schnabel.
“Today, if the inflation of the euro continues to be energetic, this would allow raising its rates to a neutral level,” Samy Chaar, chief economist at the Lombard Odier banking group, explained on the BFM Business antenna. diffuse, the ECB could become more restrictive, that is, raise rates to hit the brakes.
A risk of recession on the horizon
The outlook is all the more worrying as this inflationary situation could lead to a recession, although positive signs are emerging on the other side of the Atlantic. “We do not see any improvement in Europe, but a little more in the United States, says Samy Chaar. Pieces of the puzzle are being organized: slowdown in demand, value chains, freight cost, reopening of China. It seems to say that the Lo Worse of inflation will be late.
The chief economist believes that central banks have finally privileged the fight against inflation to the detriment of growth. “It is very likely that we are with recessive episodes and in Europe and the United States we hope that they are not too severe but will eventually happen.
Source: BFM TV
