The European economy “is not overheating.” This is one of the messages that the French president, Emmanuel Macron, transmitted this Monday in an interview with the French newspaper the echoes published on Monday. He warns in particular against the planned rate hike monetary policy in Europe.
“We have to be very careful. Unlike the United States, we are not in a situation of European overheating”, justified the Head of State. The high inflation that currently exists in Europe “was first imported from abroad, it is not linked to excess demand,” he stresses.
Raise rates?
Most central banks around the world are drastically raising their interest rates in an attempt to reduce high inflation. Its objective is to curb economic activity, in particular by making access to credit more expensive.
At the same time, many states, particularly in Europe, including France, have released billions in public aid to deal with rising energy prices. However, the risk of this policy is that it will continue to fuel inflation and frustrate the central bank’s plans to slow activity.
This is one of the reasons why major international institutions such as the International Monetary Fund call for greater targeting of this budget support towards the most vulnerable.
Bundesbank President Joachim Nagel said on Saturday that more interest rate hikes in the euro zone were “necessary” after the one already expected at the end of October to fight runaway inflation. ECB President Christine Lagarde advocated on her part on October 12 for “cooperation between monetary and budgetary policy.”
Source: BFM TV
