Frankfurt is putting pressure on. During her speech announcing a further reduction in key interest rates, ECB President Christine Lagarde spoke of the need for member states to save and reduce deficits.
It stresses that “the implementation of the revised framework for EU governance in a comprehensive and urgent manner will help reduce debts in a sustainable manner”. This framework, which uses the famous Maastricht criteria (no more than 60% debt, no more than 3% deficit), was reintroduced after a suspension during the pandemic.
Monetary policy remains restrictive
The ECB offers no further guidance on how these savings in public finances will boost growth: France, in any case, has moved away from it this year and is expected to let the deficit fall beyond 5.6%.
It should also be noted that Thursday’s rate cut only raises the deposit rate, one of Frankfurt’s three main key rates, from 3.75% to 3.5%. It is therefore still very high and leads to slowing the growth that Christine Lagarde is calling for, with the aim of reducing inflation.
Source: BFM TV
