What is the value of the euro? That is the question the European Central Bank (ECB) in Frankfurt is asking. Today, the European Central Bank faces a complex inflation exercise and a lot of economic push and pull.
Because there will be a new interest rate decision, which is a collective term for a number of measures that have been announced, because inflation is rising and well above the 2% that the European Central Bank set as its target. Meanwhile, economic growth is slowing, hampered by material shortages, logistical bottlenecks and the outbreak of the epidemic.
In recent years, the European Central Bank has done its best to grow the economy and raise the inflation rate to 2%. The central bank has invested nearly €4,700 billion in the eurozone economy by buying debt and setting interest rates at zero.
Central banks in Europe, the US and the UK are grappling with the same question: What are we going to do with hyperglycemia?
pay more for himself
The US central bank, the Federal Reserve, decided yesterday, as expected, to accelerate the gradual elimination of emergency support and will finish it in March. The rate hike will take place in three steps in 2022, just as it did a year later. Inflation in the US was 6.8% and producer prices rose 9.6%.
Inflation is higher prices for groceries, washing machines, hairdressers, holidays, and don’t forget your gas and electric bill. Pay more for the same service or product.
Inflation is peaking in euro countries, averaging around 5% in November, the highest in 25 years. There are significant differences within the eurozone, for example, inflation is lower in Italy and Portugal, but much higher in Belgium and Germany.
Huge support program
For years, the rate of inflation in the euro countries has been low. It has averaged 1.3 percent over the past 10 years. The economy struggled to get out of the financial crisis and to get things moving again, the European Central Bank put in place a massive support program in 2015 to buy government and corporate debt. That goes back to running the money faucet: in total, the European Central Bank has allowed Eurozone economies to run €3125 billion.
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