GLOBALink | Interest rate rise in Eurozone "the first of more to come": Spanish economist-Xinhua

GLOBALink | Interest rate rise in Eurozone "the first of more to come": Spanish economist

Source: Xinhua

Editor: huaxia

2022-09-20 16:49:06

The European Central Bank (ECB) abandoned its customary caution last week and raised interest rates by 75 basis points.

With inflation in the euro area reaching a record rate of 9.1 percent in August, the boldness of the ECB's record interest rate rise caused concerns.

However, some experts say that this might be the first of more to come.

Inflation in the euro area has been hovering at alarmingly high levels for a lengthened period of time, attributed mainly to price spikes of energy products and food.

Another concern for the ECB is the weak euro, which makes imports more expensive and fuels inflation in the euro area because crude oil and many commodities are paid for in dollars.

Still, observers are concerned that a rapid normalization of the ultra-loose monetary policy pursued for years could slow down the economy, which is already struggling with supply bottlenecks and reduction of gas supplies.

The global investment management company BlackRock said that the level of ECB's monetary tightening threatens to squash Europe's economic activity, which is already under pressure from the energy crisis.

The BlackRock said, "The ECB will keep up its aggressive rate hikes through the end of 2022," but then stop once it realizes the economy is suffering significantly.

Produced by Xinhua Global Service


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