FRANKFURT (Reuters) – The rapid rise in interest rates by the European Central Bank (ECB) moderated inflation slightly last year, but its full impact will only be felt in 2024, a study published on Monday shows. by the issuing institution.
The latter has raised its rates by 375 basis points since July 2022 in an attempt to control rising prices and bring the inflation rate back to its target of 2%.
“The impact on inflation should mainly be felt from 2023 and peak in 2024,” said the ECB in its Economic Bulletin.
“The tightening of monetary policy is estimated to have reduced inflation by around 50 basis points in 2022, while the impact is expected to be around two percentage points on average over the period 2023-25,” he said. she added.
The consumer price index in the euro zone was up 7.0% year on year in April and the slowdown in underlying inflation is taking place at a slow pace.
The ECB indicated that the impact of rate hikes on growth was greater, with a moderation in demand.
“The pass-through to economic activity is faster, with the impact on gross domestic product growth expected to peak in 2023 and the downward impact being two percentage points on average over 2022-25,” said added the institution.
Monetary policy normally operates with 12 to 18 month lags and some officials have used this argument to curb the pace of rate hikes to 25 basis points at the start of the month, arguing that the measures taken in the past do not have not yet fully produced their effects on the economy.
(Balazs Koranyi; Laetitia Volga, edited by Blandine Hénault)
Copyright © 2023 Thomson Reuters
I have over 8 years of experience working in the news industry. I have worked as a reporter, editor, and now managing editor at 247 News Agency. I am responsible for the day-to-day operations of the news website and overseeing all of the content that is published. I also write a column for the website, covering mostly market news.
