By Leonidas Stergiou
The Capital.gr turned to Fitch’s director of financial analysis, Tej Parikh, who two weeks ago ruled out raising interest rates in 2022 and 2023, as the data do not meet all three criteria of the ECB’s monetary policy.
On the day of the invasion, all data changed. Asked about this, Tej Parikh said: “Developments in Ukraine are blurring the ECB’s monetary policy data and estimates this year. We believe that the central bank will try to keep all options on the table until the impact becomes clearer.” of the crisis ”.
As he explains in Capital.gr Mr Parikh, new inflationary pressures are currently emerging that would explain the need to raise interest rates, as well as recessionary trends exacerbated by tough monetary policy.
“Further upward pressure on gas and food prices will push inflation even higher this year and next, which could heighten concerns about higher inflation expectations and raise voices for tougher policy sooner,” he said. .
However, “on the other hand, a prolonged crisis in Ukraine could also reduce the outlook for economic growth in the Eurozone through weaker confidence and higher inflation.”
Alpha Bank
Russia’s full-scale invasion of Ukraine could turn the gas crisis into more permanent inflationary pressures on raw materials and commodities, restoring the risk of stagflation over Europe, the chief economist said in an analysis. Alpha Bank, Panagiotis Kapopoulos, adding: The determinants of the intensity of the new shock in the European economy are firstly, the duration of hostilities, secondly the form and stability of the new status quo that will emerge, thirdly the escalation of sanctions against the Russian economy , and finally, the impact of European countries’ government spending – to finance the energy crisis – on their fiscal balance, which has already been temporarily disrupted in recent years by the pandemic.
Warning Giannis Stournara
The most immediate reaction to the new data may have been that of the Greek central banker Mr. Giannis Stournaras, who stated that the central bank (ECB) should continue to buy bonds at least until the end of the year, in order to deal with the deflationary effects in the medium term. and in the long run from a conflict in Ukraine.
“These were valid until yesterday”
Fitch’s assessment expressed on Capital.gr, confirms the first conversations of the German economist and member of the ECB, Isabel Schnabel, during her speech at the Bank of England yesterday. Ms. Schnabel, who is considered one of the “hawks” of the ECB, said at the beginning of her speech that the data show that inflation persists with trends above 2% in the medium term. But these figures were valid until yesterday (p. p. Wednesday), before the war in Ukraine.
Source: Capital
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