Another 50 basis points in March

Consumer prices averaged 8.5% growth

The decision was widely expected and announced mainly by the institution itself, which decided to move forward despite the new slowdown in inflation dynamics. Average growth in consumer prices in the eurozone, at 8.5% year-on-year in January, remains well above the 2% target pursued by the ECB itself. The commitment indicated in March was less clear.

Lagarde: “Rates show why we don’t have to deal with inflation”

In fact, ECB President Christine Lagarde made it clear, at the press conference at the end of the Governing Council, that the European power must continue to raise interest rates because “we haven’t done it yet” in the fight against inflation, which is still “too high” in the eurozone. . In fact, Lagarde explained: “There is still no deinflation. If we look at core inflation, net food and energy, we were at 5% in November, it went up to 5.2% in December and we’re still at 5.2%, an all-time high.” He stressed that the eurozone cannot be said to be in the same situation as the US, with the Fed instead talking about signs of “declining inflation”.

“Energy subsidies are temporary, and will disappear if prices fall.”

Lagarde then explained that the ECB had relaunched and strengthened its recommendations to governments on containing aid measures against energy price increases, again accompanied by the explicit “signaling” (or threat) that it should tighten its monetary policy further if these recommendations are not complied with. “Support measures must be temporary, targeted and designed to maintain the incentive to use less energy. In particular, as the severity of the energy crisis decreases, it is important to start now and urgently lift these measures,” he said, in parallel. coordinated decline in energy prices.” He then explained: “Any measure that does not follow these principles is likely to add inflationary pressures in the medium term, which may require a more active monetary response.”

Btp falls after ECB decision

BTPs took off after the monetary policy decisions of the European Central Bank, which raised interest rates by 50 basis points and announced a similar increase in March. The Italian 10-year yield fell to 4.04%, down 24 basis points, at today’s lows, while the spread with the Bund fell 10 basis points, to 189 points.

New high from the Fed

The ECB’s move is part of a common central bank strategy. Indeed, on Wednesday, the Federal Reserve announced a new hike in interest rates equal to 0.25%, anticipating a similar measure also for the next month, as part of efforts to contain inflation. In the note published at the end of the meeting, the Fed acknowledged a “certain improvement” in the price trend in the US, stating that it was not yet enough to change expectations about possible new increases in the coming months. The document states that “similar measures will be necessary to maintain sufficiently restrictive monetary policy.”

United Kingdom: The Bank of England announced a rate hike

The Bank of England also revised rates up by 50 basis points, bringing the benchmark rate to 4%. The decision was taken by the Monetary Policy Committee by 7 votes in favor, 2 against.