End to the era of zero rates. The European Central Bank (ECB) has decided this Thursday to raise the main reference to 0.50%, above the 0.25% announced in its guide. The great objective of the maneuver is to stop the historically high inflation that the euro zone is experiencing (8.6%), driven by the energy crisis and that has shown that there is nothing "transitory" as it ventured from its headquarters in Frankfurt at the beginning to climb
You have to go back eleven years to find the last increase. The unknown is whether it will be enough or the bet will have to be doubled with new increases in the coming months if prices remain untied. The increases are a double-edged sword, because although they can calm inflation at the same time it can cause a cooling in the economy that leads to a recession.
In fact, the entity must also present its anti-fragmentation mechanism for the euro today, to prevent the prospect of a crisis from triggering the risk premiums of the most indebted countries. Those from the south, mainly.
For ordinary citizens, what will the rate hike mean? By trying to stop the credit machine, mortgages -both new and flexible ones referenced to Euribor- and loans will be more expensive. If the economy slows down, it can logically affect activity and employment.
On the other side of the scale, with increases the door is opened to better remunerate deposits, savings held in the bank, and if inflation goes down, energy prices or the shopping basket will they would calm
The historically atypical situation of low rates and huge debt purchases has also left positive and negative notes along the way. According to a recent study by S
But on the other hand, the banking sector has entered an era of minimal profitability, forcing entities to redirect their investments in riskier assets, such as medium- or low-rated corporate debt issues, which have tripled.
