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The ECB will maintain the pace of rate hikes with inflation at 9.2%

Date: February 27, 2024 Time: 06:03:52

Barely inflation gives respite to the Eurozone. The rise in prices was 9.2% last month, which represents a strong moderation with respect to the 10.1% to which they advanced in November, but it continues to represent a notable effort for families, companies and for the states themselves. The rise in the cost of living puts pressure on the European Central Bank (ECB) and the most orthodox members of its Governing Council, known as ‘hawks’, show their claws.

The last to do so was the governor of the Bank of the Netherlands, Klaas Knot, who has made it clear that the entity is not going to be satisfied with a single increase of 50 basis points in interest rates in its next monetary policy meetings. In an interview with the American CNBC channel, Knot has made it clear that the issuer “will not stop after a single increase of 50 basis points, that’s for sure”, in reference to the increase in that amount that the entity led by Christine Lagarde applied the last month and which left the reference rate at 2.5%, its highest level since the end of 2008.

The entity began to raise the price of money later than other central banks (such as the US Federal Reserve), so this tightening is being reflected in inflation but it will take time to place it at rates closer to the 2% target. This is so due to the lag of between eighteen months and two years that exists in the transmission of monetary policy. The annual CPI rate peaked in October at 10.6%, its highest level since the creation of the euro.

The entity is now concerned about core inflation, which excludes its calculations the most volatile components such as energy and food, since it tends to reflect more structural tensions. “I can’t say in advance where that 50 basis point rate of rise is going to end, but it is very clear that our president has used the plural in her words,” she added.

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Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.
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