Given the “loss of growth dynamism and the high level of inflation”, the Eurogroup debate will have as its main message “that budgetary policy must remain prudent.”
The finance ministers of the eurozone will debate this Friday the macroeconomic context in the single currency area. and must insist on commitments to budgetary prudenceafter a new increase in interest rates by the European Central Bank (ECB).
Held in the Spanish city of Santiago de Compostela within the framework of the Spanish presidency of the EU, the Eurogroup meeting takes place at a time of timid economic growth, weak consumption in the face of a restrictive monetary policy and still high inflation, so “the main message will be that budgetary policy must remain prudent“, according to community sources.
“It’s worrying.” Marcelo says that the increase in interest rates favors “more radical” and “populist” political forces
“Two months have passed since the last Eurogroup meeting and, since then, data has emerged that reveals a Loss of growth dynamism and still high inflation level.although decreasing, and lower consumption,” they noted, recalling the “substantial uncertainties” of the macroeconomic context.
This Friday’s debate takes place a day after the ECB announced a new increase in the three official interest rates by 25 basis points, as in the previous meeting, placing the deposit rate at the level the highest level ever recorded in the eurozone.
This was the 10th consecutive interest rate hike by the central bank, which has raised interest rates by 450 basis points since July last year. the fastest ascent cycle of the history of the eurozone.
The ECB raises interest rates (with Centeno voting against). Rates May No Longer Go Up, But They Won’t Go Down Any Time Soon
In its summer macroeconomic forecasts, published last Monday, the European Commission revised downwards the inflation forecast for this year in the euro zone, to 5.6%, stating that the restrictive monetary policy “is working”, but warned of income losses and worsened the projection for 2024. .
Also that day, the institution announced that the “very weak” economic activity of recent months in the euro zone and the EU, which is expected to continue, led to a downward revision of the projections. for economic growth in 2024, at 1.3% and 1.4%.
The inflation rate has been falling in recent months after registering historical values due to the reopening of the economy after the Covid-19 pandemic, the energy crisis and the economic consequences of the war in Ukraine, but still above the objective of 2 % marked. .BCE for price stability. To achieve this, the ECB has tightened monetary policy with successive increases in interest rates, now at a slower pace.
BE, PCP and Chega criticize the ECB and want banks to pay increases in housing
Also this Friday, euro ministers will debate the succession of Fabio Panetta, a member of the Executive Committee of the ECB who ends his position on November 1, for whom only the deputy governor of the Bank of Italy, Piero Cipollone, was nominated.
It is up to the Eurogroup to debate this candidacy and adopt a recommendation to the European Council, which will make a final decision after listening to the ECB and the European Parliament.
Source: Observadora
