2.6 C

ECB, “rates must rise. Bond tightening since March and real wages are significantly lower than before the pandemic.”

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The Central Bank Bulletin highlights that wage levels could prompt unions to call for higher wage increases in the next round of negotiations, especially in lower wage sectors. In addition, the eurozone economy in the fourth quarter of 2022 and the first quarter of 2023 “may suffer from contraction.”

Further increase needed interest rates bring back inflation to 2%, and since March it has been confirmed that wallet bonds purchased over the years under the Supplement program “will be reduced at a measured and predictable rate” equal, on average, to 15 billion euros per month until the end of the second quarter of 2023, and then to be determined over time. It’s highlighted Economic Bulletin from BC which, taking into account the decisions Board of Directors dated December 15, states that the eurozone economy in the fourth quarter of 2022 and in the first quarter of 2023 “may be subject to reduction due to a crisis energyto high uncertainty, to weakening world economic activity and most stringent financing conditions” and with “downside” risks, but “possible recession this would be a relatively short and insignificant value. Also, taking into account the influence inflationthe real wages of consumers are now much lower than before pandemic.

“Price pressure remains strong in all sectors” – Between September and mid-December 2022, amid expectations of a more marked tightening of monetary policy, interest rates over the long term, they have generally risen only modestly,” and “government bond spreads have narrowed,” the report says. Looking for progress Italy And Greecethe document seems to refute those who feared a widening spread between rate hike announcements and liquidations quantity and mitigation. “Differentials on ten-year Italian and Greek government bonds,” notes Bulletin – down 18 and 22 basis points, respectively.” If we assume a contraction during the first quarter of the new year, on the other hand, BC pay attention to signals positive” from employment increased by 0.3% in the third quarter, and from unemployment to a new all-time low of 6.5% in October. There central bank he then notes that “price pressure remains strong in all sectors” and that the level wage can call me unions call for higher wage increases in the next round of negotiations, especially in lower wage sectors. Looking at the economy as a whole, compared to pre-pandemic levels in the fourth quarter of 2019, real wages declined much less in terms of producers than in terms of consumers. This circumstance was largely due to contactless-intensive services.

Families and business – With the ECB’s monetary tightening, bank lending to businesses remains robust thanks to the replacement bonds through bank loans and the use of credit to finance higher investment and production costs, while families borrow less as a result of tightening credit standards, higher interest rates, worsening prospects characteristics Residential and less trust consumers.

Wage Node – “AT salary dynamics show reinforcementsupported by the strength of labor markets and some adjustment salary aimed at compensating workers for rising inflation,” explains la BC. “Given the expected persistence of these factors, projections formulated in December 2022, indicate that wages will record growth rates well above historical averages, leading to higher inflation throughout the period under review,” he continues. In addition, it adds, “It is expected that market labor continues to show relatively good resistance to minor recession incoming, reflecting strategies to maintain labor, work while there is still a significant labor shortage. There are positive signals from occupation”which increased by 0.3 percent in the third quarter, and from unemployment, which hit a new all-time low of 6.5% in October. Increase wage it must partly compensate for the loss of purchasing power by supporting consumption. However, the European Central Bank notes that due to the weakening economy, job creation in the coming quarters is likely to slow down and unemployment may increase.”

Source: II Fatto Quotidiano

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