IMF “bell ringing” for possible recession in Europe: A heavy winter could lead to social unrest

A severe winter could lead to social unrest in Europewhere Russia’s invasion of Ukraine has already had “horrendous” economic consequences and is rekindling fears of a recession, its head said today International Monetary Fund.

Kristalina Georgieva stressed that the current situation means the European Central Bank will have to carefully balance its fight against inflation with the “need not to stall the economy”.

“There is certainly a fear of a recession in some countries, or even if it’s not a recession, that it will feel like a recession this winter. And if Mother Nature decides not to cooperate and the winter is really severe, that could lead to some social unrest,” he added.

Georgieva called on central bankers to “persist” in their fight against inflation, commenting that many economists were wrong to predict last year that inflation would ease. “Inflation is unyielding (…) and that means we need central bankers to be equally unyielding in fighting it,” he stressed.

If fiscal and monetary policy go well, next year may prove less painful. But if fiscal policy is not targeted, it could become “the enemy of monetary policy, fueling inflation,” he concluded.

Rising bond yields discount ECB rate hike to 2%

Bond prices in the eurozone are falling today, as expectations for a rapid increase in interest rates from the European Central Bank seem to be consolidating.

In this spirit, the head of the Central Bank of France and member of the ECB’s board Francois Villeroy also acted today.

As he mentioned in his statements, the ECB could reach the neutral level of interest rates – which he placed around 2%– until the end of the year. It is recalled that the key interest rate of the ECB today after two increases is at 1.25%.

He clarified that the ECB will proceed with further measures to limit the monetary policy, after reaching a neutral interest rate level, only if this is deemed necessary.

In HDAT, transactions of 93 million euros were recorded, of which 55 million euros related to purchase orders. The yield on the 10-year bond stood at 4.32% from 4.20% yesterday against 1.72% of the corresponding German bond, resulting in the spread at 2.60% from 2.49%.

In the foreign exchange market, the dollar strengthened against the euro with the European currency trading at $0.9982 in the early afternoon from $0.9978 at the market open. The indicative price for the euro/dollar exchange rate announced by the ECB was 0.9990 dollars.

RES-EMP

Read the News today and get the latest news.
Follow Skai.gr on Google News and be the first to know all the news.