This Friday, eurozone finance ministers will discuss the macroeconomic context in the eurozone and push for commitments on fiscal prudence, following a further interest rate hike by the European Central Bank (ECB).
The Eurogroup meeting is being held in the Spanish city of Santiago de Compostela as part of the Spanish presidency of the EU and comes at a time of timid economic growth, weak consumption in the face of tight monetary policy and still high inflation. That is why “the main message will be that fiscal policy must remain prudent,” community sources said.
“Two months have passed since the Eurogroup last met and since then data have emerged indicating a loss of growth momentum and a still high level of inflation, although declining, and lower consumption,” they stressed, recalling to the “substantial uncertainties” of the macroeconomic context.
Today’s discussion comes one day after the ECB announced another increase in its three key interest rates by 25 basis points, as at the previous meeting, taking deposit rates to their highest level ever in the eurozone.
This was the tenth consecutive rate hike by the central bank, which has raised rates by 450 basis points since July last year, the fastest rising cycle in the eurozone’s history.
In its summer macroeconomic forecasts, published last Monday, the European Commission revised downwards this year’s inflation forecast in the eurozone to 5.6%, saying tight monetary policy is “working” but warning income losses and worsened the 2024 projection. .
Also on the day, the institution announced that “very weak” economic activity in recent months in the eurozone and the EU, which is expected to continue, has led to a downward revision of economic growth forecasts in 2024, to 1.3% and 1 0.4%.
The inflation rate has fallen in recent months after registering historical values due to the reopening of the economy after the Covid-19 pandemic, the energy crisis and the economic consequences of the war in Ukraine, but is still above the stated target of 2% ECB for price stability.
To achieve this, the ECB has tightened monetary policy with successive rate hikes, now at a slower pace.
Also today, euro ministers will discuss the succession of Fabio Panetta, member of the ECB Executive Committee, who will leave his position on November 1, for which only the deputy governor of the Bank of Italy, Piero Cipollone, stood as a candidate.
It is up to the Eurogroup to debate this candidacy and adopt a recommendation to the European Council, which will make a final decision after hearing the ECB and the European Parliament.
Source: DN
