XAUUSD: Issues related to interest rates
Updated
Important statements by ECB member Ben about inflation and tightening approaches
➡Yesterday, Monday, in an interview, European Central Bank member Philip Lane made the following statements:
- The European Central Bank's decision to raise interest rates took longer than the US Federal Reserve's decision due to several factors.
- In 2021, demand played a more important role in pushing inflation within the United States higher, precipitating monetary policy tightening by the US Federal Reserve.
- The European Central Bank did not cut interest rates during the coronavirus pandemic, unlike the US Federal Reserve and the Bank of England, so the initial interest rate increases reflected the pandemic cuts.
- The main source of inflation was the energy price shock, as evidenced by consumer surveys.
- Raising interest rates helps mitigate the impact of increases in energy prices on inflation in the euro area.
- The ECB aims to slow wage growth through 2024 to promote a return of inflation to the ECB's 2% target.
- The ECB's single interest rate policy requires domestic policies to fill the gaps within individual countries.
- The European Central Bank will keep interest rates high until inflation returns to 2%, but this could take some time.
- The neutral level for interest rates is likely to be around 2%, which reflects the average long-term policy interest rates.
- The ECB recognizes the need to be vocal about confronting uncertainty and learning from unexpected developments.
- The ECB's decisions are driven by the need to curb high inflation.
➡Yesterday, Monday, in an interview, European Central Bank member Philip Lane made the following statements:
- The European Central Bank's decision to raise interest rates took longer than the US Federal Reserve's decision due to several factors.
- In 2021, demand played a more important role in pushing inflation within the United States higher, precipitating monetary policy tightening by the US Federal Reserve.
- The European Central Bank did not cut interest rates during the coronavirus pandemic, unlike the US Federal Reserve and the Bank of England, so the initial interest rate increases reflected the pandemic cuts.
- The main source of inflation was the energy price shock, as evidenced by consumer surveys.
- Raising interest rates helps mitigate the impact of increases in energy prices on inflation in the euro area.
- The ECB aims to slow wage growth through 2024 to promote a return of inflation to the ECB's 2% target.
- The ECB's single interest rate policy requires domestic policies to fill the gaps within individual countries.
- The European Central Bank will keep interest rates high until inflation returns to 2%, but this could take some time.
- The neutral level for interest rates is likely to be around 2%, which reflects the average long-term policy interest rates.
- The ECB recognizes the need to be vocal about confronting uncertainty and learning from unexpected developments.
- The ECB's decisions are driven by the need to curb high inflation.
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