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De Guindos predicts a technical recession and high inflation in the euro zone


Vice President of the European Central Bank (ECB), Luis de GuindosIt said on Friday that negative growth is forecast for the next two quarters A “technological recession” will occur in the euro zone and “low growth” in 2023 and Inflation that will “remain high”.

De Guindos referred to the complex macroeconomic environment during his opening speech Financial days of S’Agaró. He assured that there is a “technical recession” central situation in the euro zone as a result of the evolution of the coming quarters according to the European Commission’s latest economic forecast and added. The ECB’s forecasts to be released in December will not be “significantly different”..

Similarly, De Guindos has called Avoid conflicts between economic and fiscal policiesAnd it has been argued that it should be Achieve deflation To also give a clear indication of “stabilization of interest rate hikes”. “In the third quarter you are already looking at a significant slowdown (of the economy in the euro zone) and the European Commission is already announcing a very likely negative growth rate, which May be extended till first quarter of next yearWhich would be the definition of a technical recession by accumulating two quarters with negative growth rates”, he indicated.

The ECB tries to curb inflation

The ECB vice-chairman has ensured inflation This is affecting the disposable income and investment of households and firms, and this context is further uncertain due to the consequences of the war in Ukraine. Regarding inflation, he said that the European economy was thus experiencing “a year and a half with negative surprises” and highlighted that. The ECB is trying to keep it at 2%. “The longer the period of high inflation, the more likely it is to have a second-round effect,” he warned, pointing to the problem of raising wages at the same level as inflation and leading to new price increases. .

He said that, in this regard, the ECB is “in the process of normalizing monetary policy” and actions in the immediate future It will depend on the evolution of macroeconomic data. From the outset, he made it clear that there would be a discussion on what to do with the ECB’s balance sheet in December, and he advocated taking any decision in this area with caution.

“The balance sheet decision should help Reducing excess liquidity in the market“, he commented and added: “This process of reducing the balance should be done very carefully, because in addition We don’t have much experience with it“.” Our aim is to monitor inflation expectations and signal that another round of results is undesirable,” he added.

Source: lainformacion.com

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