By Chrysostomos Tsoufis

“Life is a journey, not a destination.” With this phrase, attributed to the American essayist and poet of the 19th century Ralph Waldo Emerson, Christine Lagarde – after announcing the seventh increase in interest rates since July – wanted to make it clear that the seventh does not mean the last. Everything will depend on the data coming in mainly on inflation and bank lending.

Inflation according to the first data for April increased even marginally compared to March. And the Christine Lagarde he has reason to fear that he has not said… his last word:

-The Chinese economy may have escaped the grip of the zero-cases policy to combat the pandemic, but disruptions to the supply chain remain and could push retail prices higher than estimates
-The ongoing Russia-Ukraine war is likely, according to the French economist, to wake up the energy price monster that is currently in hibernation.
– Higher-than-estimated wage increases could add fuel to the inflation fire, with Christine Lagarde saying recent collective and non-bargained pay rises have increased risks rather than weakened them.
-The high profit margins of businesses also work as reinforcements.

Even for him inflation of food which fell almost 2 points from the all-time record of 15.5%, Lagarde when asked was unable to say whether the worst is over. Even climate change has been added to the cocktail of risks lurking to send food prices back, or rather keep them high. There is a glimmer of light in the fact that prices of raw materials have fallen and he expressed hope that they will be passed on to the consumer.

However, in the event that developments do not go as desired and further interest rate increases are needed – which is the basic scenario – at least Greek mortgage borrowers are protected as the banks have decided to freeze installments at the level of March for the next 12 months. If they do not belong to the 50,000 vulnerable families (with expanded income criteria) they will also see a subsidy of 50% of the increases that have resulted from the 7 interest rate increases.

The rest – borrowers of consumer and business loans as well as prospective borrowers – as Lagarde said, should hope that inflation will subside quickly.