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November 23, 2022
The European Central Bank said they would carry out a policy tightening the deposit rate by adding 50 basis points. This increase was also because the ECB worried that significant price growth would occur and make a recession even more real.
Inflation in mainland Europe has soared, and it seems that energy prices are already unimaginable, mainly due to the Russian invasion of Ukraine. It was noted that because of the invasion, European and even world supply chains became chaotic.
This figure is far above the European Central Bank's target of inflation at 2%. Meanwhile, when inflation was transitory, the central bank decided not to bring in other significant peers, so now what seems to be refinancing.
A majority of 45 of 62 respondents held the deposit rate view and announced that they believed there would be another 75 bps. So for other options, the ECB monetary calls for another price growth. The goal is that next month's deposit rate is not in a recession.
The European Central Bank President, Christine Lagarde, said that adding 50 bps or half a point is the best thing for the European economy. The economy will be entrenched, and the rapid price growth will allow the bloc to get out of the recession,
It is becoming increasingly evident, inflation in the region has soared due to surging energy prices, which is not surprising anymore. Inflation in the Euro area is far too high, and it is said that the increase in rates further.
Then, it makes the public judge that this restriction activity has increased confidence in the Euro. So the European Central Bank is very confident in bringing higher interest rates. Not a small number, 50 bps is a bold decision from the Central Bank.
The ECB has also repeatedly pursued seemingly speculative policies while remaining confident. The central bank said this might be the only solution during far too high inflation in the Euro Area; an even higher interest rate was needed since July.
So, according to many economists, a recession is getting closer to happening soon. The European Central Bank's whiteboard news focuses on the recession. Recession is talked about everywhere, and there is no sign that it is over.
And because of this, many parties gave birth to other relevant speculations. The European Central Bank even said that a recession is more likely. In all 19 countries that use the Euro Currency, the likelihood of a recession is already at the warning stage.
Russia's invasion of Ukraine is the main reason this happened. People and firms have a feeling regarding the impact of rising inflation and the slowdown in economic activity that is not expected.
This Twice-yearly assessment also makes stability challenging to achieve, and the probability of the Eurozone weakening against the US Dollar is already at 60%. The Economist also provides further assumptions regarding reports from many parties.
Meanwhile, French ECB policymaker Francois Villeroy de Galhau said that peak inflation would occur in France and several European countries first. To settle inflation, in the first half of next year, inflation must be brought back to a level of 2%, according to the ECB's target.
"It is out of the question to let inflation settle in, which is a disease for the economy. Inflation should peak in France and some European countries by the first half of next year," said Francois Villeroy de Galhau during an interview with France 5 Television media Monday.
Europe amid the war in Europe causing technical difficulties. Meanwhile, for global markets, such programs targeted pile-up so that additional risks are likely to arise due to position.
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