Christine Lagarde has tempered expectations for a rate cut this summer, pointing in particular to tensions in the Middle East.
New wave of inflation in 2024?
Christine Lagarde did not elaborate further on her confidence made in Davos, namely that the ECB could lower rates as early as this summer.
The President of the ECB even clarified that the question of a rate cut was not discussed. The question will eventually arise in March, when governors will have the latest economic projections.
But as it stands, the ECB actually anticipates a return of inflation towards 2% over the coming months. Unless geopolitical tensions decide otherwise.
Currently, annual inflation is 2.9% in the Eurozone. It is still 6.1% for food products. Here is where we are over a two-year period in France:
Inflation is slowing, but prices are not falling. You have to go back to the 1950s to find an annual drop in prices. The system is like this. It’s a ponzi which, in the absence of productivity growth (which requires cheap energy), results in more or less high inflation…
Asked whether the increase in the price of maritime freight could stop the fall in rates, Christine Lagarde was skeptical. “Sea freight only accounts for 1.5% of the final price of transported goods”has she declared.
Certainly, but the price of transport is much higher for food than high-tech products like smartphones. The impact on the poorest will therefore be well above 1.5%.
The former president of the IMF, however, was concerned about the price of oil and gas. Indeed, Yemen is now threatening to close the Strait of Hormuz through which 20% of world oil production passes.
Knowing that most of the oil consumed in Europe passes through there. As well as large quantities of gas due to the embargo against Russia
In other words, we probably shouldn’t count too much on a fall in summer rates on the old continent. This bullish factor for bitcoin is postponed.
Regardless, ETFs, halving and the ECB’s concerns about bank runs will be enough to convince millions more people to invest their savings in bitcoin.
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