Post by account_disabled on Mar 4, 2024 9:45:06 GMT 1
The ECB is not letting up. And yesterday interest rates rose a new quarter point, to 4% due to the remuneration of bank deposits. The reasons given by Lagarde for this new turn of the screw indicate that inflation, despite its reduction last year, is still too high and, furthermore, points to too long a period to return to the 2% desired by the ECB. For this reason, his pulse does not tremble when he affirms that, although the monetary restrictions have been severe and are already strongly affecting credit and activity, this is absolutely necessary. Although the announcement of the increase is significant due to its effects on the most indebted households, attention must be paid to what other monetary restriction mechanisms of the ECB suggest. The first, the reduction of long-term credit, granted to eurozone banks under especially advantageous conditions (the so-called 3-year TLTRO): if last November the total pending amortization exceeded 2 billion euros (of of which 274,000 million corresponded to Spanish banks), that volume had fallen drastically.
This July to just 600,000 million (and 88,000 million for Spain). Its indirect effect is by no means negligible. If in 2022 it underestimated inflation, let's hope that now the ECB is right The fall in the ECB's balance Job Function Email Database sheet is having less impact. Started in March, until July it has only been reduced by 70,000 million, placing its amount at 4.9 trillion euros, of which 12% corresponds to Spain. But in this important aspect, the possibility of announcing a more substantial reduction has not materialized: a more rapid disinvestment would push up the interest rates on public debt and other long-term bonds, affecting activity more than rate increases. short term. This anticipates (perhaps?) that we will soon reach the end of this restriction stage. View of the headquarters of the European Central Bank (ECB) in Frankfurt, this past Thursday EFE/RONALD WITTEK In any case.
The effects of the ECB's decisions can be seen in the tightening of credit conditions for families and companies, and in the reduction of their demand: its increase for companies in the eurozone was reduced to 3% in June, while that those granted to households also moderated their increase (up to 1.7%). In this order of ideas, the survey of the eurozone financial system corresponding to the second quarter shows a marked reduction in the demand for credit, both from companies and families, at the same time that banks anticipate greater restrictions in granting them. in the coming months.Some measures and some answers from the book: the ECB wants to curb consumption and investment demand and reduce pressure on the labor market and, thereby, control inflation.
This July to just 600,000 million (and 88,000 million for Spain). Its indirect effect is by no means negligible. If in 2022 it underestimated inflation, let's hope that now the ECB is right The fall in the ECB's balance Job Function Email Database sheet is having less impact. Started in March, until July it has only been reduced by 70,000 million, placing its amount at 4.9 trillion euros, of which 12% corresponds to Spain. But in this important aspect, the possibility of announcing a more substantial reduction has not materialized: a more rapid disinvestment would push up the interest rates on public debt and other long-term bonds, affecting activity more than rate increases. short term. This anticipates (perhaps?) that we will soon reach the end of this restriction stage. View of the headquarters of the European Central Bank (ECB) in Frankfurt, this past Thursday EFE/RONALD WITTEK In any case.
The effects of the ECB's decisions can be seen in the tightening of credit conditions for families and companies, and in the reduction of their demand: its increase for companies in the eurozone was reduced to 3% in June, while that those granted to households also moderated their increase (up to 1.7%). In this order of ideas, the survey of the eurozone financial system corresponding to the second quarter shows a marked reduction in the demand for credit, both from companies and families, at the same time that banks anticipate greater restrictions in granting them. in the coming months.Some measures and some answers from the book: the ECB wants to curb consumption and investment demand and reduce pressure on the labor market and, thereby, control inflation.