Russia and Ukraine put pressure on ECB decisions

The European Central Bank (ECB) is meeting on Thursday under pressure from high inflation, which is in danger of escalating if the Russian-Ukrainian conflict ends in a war; experts believe that for the time being it will not raise interest rates.

Prices in the eurozone, which consists of 19 of the 27 countries of the European Union (EU), rose by 5% in 2021, a record in 25 years, driven by energy tariffs (26%) and product shortages and raw materials.

With that more than doubled the inflationary target of the 2 percent monetary bloc.

However, according to most experts, ECB governors should refrain from paving the way for an increase in its benchmark rate, currently at its overall low of 0 percent.

An increase, these economists argue, will not currently help to fully control inflation, and on the contrary, it will slow economic activity at a time when it is recovering from the impact of the pandemic.

Maintaining the status quo, without indicating a change, will contrast with the position of the US Federal Reserve, which has just announced an upcoming interest rate hike.

“Inflation in the eurozone is largely driven by a lack of supply and not by excessive demand or an overheated economy,” Elga Bartsch, chief economist at BlackRock, told AFP.

A final invasion of Ukraine by Russian troops will push up energy prices, as Russia is the main supplier of gas to the European Union and part of the liquid passes through Ukraine.

Inflation in Spain slows

Inflation recorded a slight decline in Spain in January to stand at 6% per year, a level still close to the December record of 6.5%, according to a first estimate published yesterday by the National Institute of Statistics (INE) is.

This setback, which follows several months of strong rises, is mainly explained by the “decline in the price of electricity compared to the rise recorded in January 2021,” the INE stressed in a statement.

Relieve pressure in Germany

On the other hand, annual inflation in Germany slowed in January, but remained higher than analysts had expected and well above the European Central Bank’s price stability target of 2% for the eurozone as a whole, they showed yesterday.

Germany’s consumer price index, which has been harmonized to make it comparable to inflation data from other European Union countries, rose 5.1% year-on-year, up from 5.7% in December, the German Federal Statistical Office said.

The national consumer price index rose by 4.9% annually, representing a decline from the 5.3% level of December.

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