What was promised was simple. At this meeting of the Governing Council on March 16, which included the publication of new macroeconomic projections, the monetary authority would raise interest rates by half a percentage point (50 basis points) and, based on these same projections, “assess the further trajectory of monetary policy“. Interest rates went up as indicated, but if this “assessment” of next steps was made, it was not communicated publicly, because Christine Lagarde has not given any clue about what could happen in the coming months. – in recognition that strains in the banking system have already rendered such (new) economic projections obsolete.
As soon as the press conference began, which began as usual half an hour after the announcement of the decision on interest rates, Christine Lagarde explained that the debate held in the Governing Council of the European Central Bank (ECB) was based on the new economic projections that staff of the central bank is updated every three months. But he stressed that the work of the economists ended “at the beginning of March” and data up to mid-February were used, that is, out of date in almost a month.
A “snapshot” of the economy with a lag of one month may not be very significant for monetary policy decisions, and usually is not. But when, in the space of that month, European banking came under pressure, credit granting showed clear signs of slowing down and one of the largest banks on the European continent, Credit Suisse, found itself one step from the abyss. , it became “impossible” to define a trajectory with conviction and credibility.
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Source: Observadora
