Tuesday , January 19 2021

Dragons restrict the rate increase: "If inflation slows down, let's review the way"



Confirmation of farewell to QE in December, while raising rates could slip if prospects
of inflation should be revised downwards. At the last meeting in October, the board of directors of
The ECB agreed to maintain future guidance predicting the end of the EQ in December and rates at current levels, at least until the summer of 2019, unchanged.
to the data and, therefore, in the event of a drop in liquidity or a worsening of the inflation outlook, there may be an adjustment
of the way envisaged for raising rates'
. Mario Draghi said this during a speech at the European Banking Congress in Frankfurt. «The nature of this front
Guidance depends on economic developments and therefore acts as an automatic stabilizer. If the financial conditions
monetary policy should become unduly more restrictive or if the prospect of inflation worsens, our
"Reaction function" would be well defined. This, in turn, should be reflected in a planned route adjustment
to raise interest rates. "


"The lack of fiscal consolidation in countries with high public debt," Draghi said, "increases their vulnerability
to be produced independently, questioning the European Union's architecture rules
which are imported through a financial contagion. So far, the spread spread has been largely limited to the first case and contagion between countries has been modest. " 'These developments
restrictive conditions for bank financing for the real economy. To date, although some upward repricing
of bank loans occurred when the spread increase was more significant, overall overall costs
bank loans remain near historical lows in most countries, thanks to a deposit base
stable. To protect families and businesses from rising rates, countries with high debts should not increase
its debt and all countries must respect the Union's rules ".


"I want to stress," continued the President of the ECB, "how The conclusion of economic and monetary union has become more urgent over time. and not least, not only for the economic reasoning always implied in my speeches, but also for preserving the construction
European Union. "" To prepare for my last speech here, "Draghi said," I reread the speech I gave
here in November 2011. So I said that the economic crisis would require a faster step in the process
strengthening of the monetary union … Since then, the work done has been remarkable, but it is still far from over. O
conclusion of the banking union in all its dimensions, including the reduction of risk and the beginning of a union of banks
Capital markets through the implementation of ongoing initiatives from 2019 has now become an issue
as urgent as the first steps in managing the eurozone crisis seven years ago. Urgency today
is not dictated by an economic crisis that we face successfully, but because it represents the best response to threats
which are directed at our monetary union: for these threats, the answer is only that of a larger Europe. "

(Il Sole 24 Ore Radiocor Plus)

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