President of the European Central Bank, Christine Lagarde.
Apparently prefers additional bailouts, if required, over an inflationary spiral (Photo: GettyImages, Thierry Monasse)
Quite a few assessments have been heard in recent days, according to which the interest rate increase by the world's central banks will be moderated, in light of its negative effect on the banks' situation.
And so, while everyone is waiting to see at what rate the Emirati governor, Jerome Powell, will raise interest rates in the US, after the collapse of SVB Bank and a steep decline in the shares of FRB Bank (which it seems will very soon also need a bailout), the European Central Bank signaled today that Its main task remains the fight against inflation.
The president of the European Central Bank, Christine Lagarde, raised the interest rate by 0.5%, the level of the previous increase (and lower than the two previous increases, which were at the level of 0.75%), but still a significant increase, given the average inflation in the Eurozone of 8.5 Now it remains to be seen how they will react to this in the capital market, where they may wish for a more moderate increase, against the background of the liquidity difficulties that some of the banks
have
discovered.
Governor of the Bank of Israel, Prof. Amir Yaron.
It is likely that he will continue to raise the interest rate, in about two and a half weeks, mainly against the background of the relatively high February index (photo: image processing, Flash 90, Yonatan Zindel)
What will they do in the USA and Israel?
Lagarde, who was accused by her critics of being slow to respond to the inflationary changes and grasping the weapon of raising the interest rate only when it began to increase, thereby conveys an important message that the fight against inflation is more important than supporting economic growth, or if more blunt words are needed: the central bank prefers "bailouts", meaning support for banks if more institutions Financials will run into difficulties, over the neglect of the war on inflation.
Now it remains to be seen how Jerome Powell, the chairman of the American Fed, will behave - and as a result of this, what the Israeli governor, Prof. Amir Yaron, will do at the time of the next rate decision (4.3). The assumption is that both will behave as a guard and leave the war on inflation as the first task On the part of the central banks, although they may wait a little while raising interest rates - only yesterday the February index in Israel jumped by 0.5%, that is - inflation may not be spiraling, but it is far from contained.
Of money
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Christine Lagarde
European Bank
Jerome Powell
Amir Yaron
inflation
The interest rate in the economy
