This time, the ECB cut interest rates in a hawkish and preventive manner. This can be seen from the following points:
1. The ECB gave up its pre-commitment to a specific interest rate path. Unlike in April, when Lagarde of the ECB said that interest rates would be cut in June, there was no such thing this time. Of course, it is understandable that it is a helpless implementation of the previous clear commitment.
2. Inflation in the EU showed signs of rising in May, but of course, the trend cannot be fully seen from the data of one month. However, the most direct impact of the Houthi armed forces' troubles in the Red Sea is on imports and exports to Europe, and the crazy rise in the container shipping index is also for this reason. The rise in EU inflation caused by shipping problems is indeed a risk, which is also the deep-seated reason why the ECB raised the median inflation forecast for 24 years from 2.3% to 2.5%.
3. Another thing that many people may not have noticed is that in the past two years, the ECB has been raising interest rates while expanding its balance sheet. Due to the debt problems of several countries in the eurozone, the ECB has been using two tools to expand its balance sheet during the epidemic: the asset purchase program (APP) and the pandemic emergency purchase program (PEPP). Last night, the ECB's resolution also mentioned slowing down the expansion of the balance sheet (equivalent to the Fed's taper): the PEPP portfolio will be reduced by an average of 7.5 billion euros per month. It can also be seen that while lowering interest rates, the liquidity has also been slightly reduced. #美国4月核心PCE指标显示通胀放缓 #第55期新币挖矿IO
1. The ECB gave up its pre-commitment to a specific interest rate path. Unlike in April, when Lagarde of the ECB said that interest rates would be cut in June, there was no such thing this time. Of course, it is understandable that it is a helpless implementation of the previous clear commitment.
2. Inflation in the EU showed signs of rising in May, but of course, the trend cannot be fully seen from the data of one month. However, the most direct impact of the Houthi armed forces' troubles in the Red Sea is on imports and exports to Europe, and the crazy rise in the container shipping index is also for this reason. The rise in EU inflation caused by shipping problems is indeed a risk, which is also the deep-seated reason why the ECB raised the median inflation forecast for 24 years from 2.3% to 2.5%.
3. Another thing that many people may not have noticed is that in the past two years, the ECB has been raising interest rates while expanding its balance sheet. Due to the debt problems of several countries in the eurozone, the ECB has been using two tools to expand its balance sheet during the epidemic: the asset purchase program (APP) and the pandemic emergency purchase program (PEPP). Last night, the ECB's resolution also mentioned slowing down the expansion of the balance sheet (equivalent to the Fed's taper): the PEPP portfolio will be reduced by an average of 7.5 billion euros per month. It can also be seen that while lowering interest rates, the liquidity has also been slightly reduced. #美国4月核心PCE指标显示通胀放缓 #第55期新币挖矿IO