The recent rise in real rates may have a negative impact on inflation and growthsaid on Wednesday the member of the Governing Council of the European Central Bank (ECB), Pablo Hernández de Cos, as reported by Reuters.
“A premature rise in nominal rates should be avoided“said Cos. He explained that the fall in real rates would contribute to a greater extent to the recovery, given the low inflation expectations. According to him, very favorable financing conditions need to be maintained since the euro area is far from the inflation target. How the long-term interest rate varies is a factor that must be analyzed along with the evolution of the rest of the yield curve.
A contraction in some countries or sectors of the euro area cannot be ruled out if restriction measures persist due to the health crisis, explained the ECB official.
Regarding the exchange market, Cos said that you have to monitor exchange rates even when upward pressure on the euro has eased.
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